Global consulting firm, PriceWaterCooper, has urged the Federal Government to take advantage of the growing diaspora remittances to help raise small businesses in the country. This follows a research and projection that see remittances from the 15 million estimated Nigerians leaving abroad reaching $29.8 billion in 2021.
Remittances are cash and non-cash items that flow into a country’s economy, from citizens working overseas, through electronic channels or other informal channels. As at the last check, global remittances has reached $689 billion with India, Mexico, the Philippines and Egypt accounting for the largest chunk of the inflow.
Meanwhile in Sub Saharan Africa, Nigeria accounts for a third of all inflow. In essence, as at 2018, migrant remittances form 6.1% of the country’s GDP. That exceeded oil revenues for the 4 years preceding the period.
Although the government has since set up a Nigerian in Diaspora Commission (NiDCOM), headed by Abike Erewa-Dabiri, to cater to emigrant issues, financial inflow from these citizens can serve as angel investment, structurally divested into helping local businesses to expand and create jobs that would boost the local economy.
Two of the points emphasised by PWC, concerning the reinvestment of diaspora remittances are:
a. Encouraging and creating pooled investment vehicles. One of the major barriers to investing for those in the diaspora is the minimum amount of funds, which investing firms accept.Therefore, pooled investment vehicles where members of Diaspora can be vetted and can aggregate funds for private equity investment for example, would encourage greater investments.
b. Early-stage businesses with smaller financing needs, present another great opportunity for those in the diaspora to invest through angel networks. Facilitating these investment options in small-scale and medium-scale enterprises, joint ventures and micro-credits become pragmatic and viable opportunities for the diaspora (Pande, 2014b). Such efforts will also encourage employment-generating activities, reduce further emigration and save workers from exploitative conditions abroad by providing them alternative livelihood options in their own country.
The Nigerian small business ecosystem is in dire need of investment. The Central Bank of Nigeria has installed several policies to incentivize banks to push more fund to the real sectors. One of such policies is the 65:35 lending-to-deposit ratio. However, an innovative approach that will help facilitate direct investment into viable local businesses, especially the booming tech and agribusiness sectors, may serve as support to other policies. This is where the growing emigrant remittances become useful.