Effect Of Diaspora Remittance on Nigeria Economy

Abstract

This study examined the effect of diaspora remittances on the economy
of Nigeria for the period 1999 – 2023. The annual time series data used
for the study were sourced from the central bank of Nigeria (CBN)
statistical bulletin, Nigeria bureau of statistics (NBS) and world
development indicator (WDI). Foreign direct investments (FDI), official
development assistance (ODA), and international loans and grants (ILG)
were used to proxy diaspora remittances while Gross Domestic Product
per Capita was used as a proxy for Nigeria economy. Following the
mixed order of integration observed during unit root test, the study
employing Pesaran, Shin, and Smith ARDL bounds estimation model.
The study found no long-term cointegration among variables, leading
to the exploration of short-term relationships. The findings revealed
negative short-run association between remittances and economic
development variable, a significant positive effect of official
development assistance, insignificant effect of foreign direct
investment, and international loans and grants on Gross Domestic
Product per Capita. The study recommends that the government
should promote diaspora bond investments in order to encourage
remittances which will in turn boost productivity, aid national
development through sound policy initiatives; government should
encourage investments in tourism sector and ensuring effective use of
short-term official development aid so as to attract external funds.
Policymakers should make policies that will aid foreign business
investments, encourage corporate governance and address the
negative impact of international loans by prompting exploration of
alternative funding.