Sowa Uzamere
The availability of diaspora remittances, which are a significant source of foreign funding for Africa, is utilized by many African family members. In many homes, they determine whether there will be food on the table or whether the family will go to bed hungry.
Over the past ten years, remittances to Africa have increased, and by 2022, when they reach $100 billion in value, they will surpass both official development assistance (ODA) and foreign direct investment (FDI). These funds have grown extraordinarily, enabling dependents to take up new ventures, seek education, obtain healthcare, and meet their fundamental necessities.
Remittances have a positive association with immigrants’ income and the status of the economy in the sending country, claims a report by Agusto & Co. This trend was noticeable in 2022 in the various wealthy economies that saw a sluggish economic recovery and challenges with cost of living, which constrained remittances to Nigeria.
The importance of diaspora remittances to Nigeria’s economy has increased, serving as both a major source of foreign exchange income and a catalyst for the country’s growth and development.
Global Remittances
More Nigerians will continue to turn outside for chances as the country’s depressing economic situation discourages them, and their remittances will remain a key factor in supporting the Nigerian economy. This can be found in regions like:
Money Source
Money transfers are made to support family. These are vital sources of income for many Africans who reside in remote or rural areas because they provide financial stability and security. For example, they might send a bank transfer to cover the cost of food and other necessities.
Investing money
Remittances are used to finance investments in small businesses, housing, healthcare, and education. Migrants contribute money through digital means as working capital for their enterprises. For instance, according to UNCTAD data, nations with larger remittances typically have lower levels of poverty. Additionally, studies show that by giving business financing, remittances encourage entrepreneurship in Africa.
Education
International students regularly use money transfer services to pay for their educational expenses and basic needs while studying abroad.
Economic expansion
Remittances from the diaspora are a vital tool for a country’s economic development. For instance, the development of many countries depends on connections with the diaspora. For instance, a government may offer a diaspora bond to its foreign diaspora or residents in order to obtain money for financing development initiatives in the nation of issuance.
The importance of overseas transfers to African economies is well established. One of the most significant sources of foreign cash, the continent receives an estimated $100 billion annually. For a large portion of this money, there is now also growing enthusiasm and worry. Two fundamental socioeconomic trends—increased emigration and an expansion in remittance channels—reflect this.
A large-scale exodus (Japa Wave)
The informal term “Japa”—a Yoruba phrase that means “flee or run away”—has been applied to this expanding migratory trend. As a result of the global labor shortage experienced after COVID-19, more nations, particularly highly sought-after locations, have opened their doors to immigrants, providing more opportunities than ever for migrants looking for employment in settings with better economic and living conditions.
Remittances are a growing trend in the world of money transmission. Thanks to the rise in popularity of mobile and online banking, sending money abroad is now easier than ever. Fintech partnerships encourage remittances to Africa from the continent’s diaspora. The blocks provide innovative ways to cut costs and improve the speed and efficiency of remittances from the diaspora.
As a result of COVID-related mobility restrictions, the use of digital money transfer channels has significantly expanded. Lockdowns and border closures that occurred all across the world in 2021, according to estimations, raised mobile phone payments by 48%.
According to Agusto & Co., having a physical address and a digital presence gives businesses an advantage since they can take use of the dependability and convenience of physical locations as well as the accessibility of digital solutions.
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