The impact of diaspora remittances to African economies

The impact of diaspora remittances on African economies has been a topic of discussion, with PwC Nigeria reporting a 10% growth in official remittances to sub-Saharan Africa, reaching $46 billion in 2018. Andrew Nevin, Partner and Chief Economist at PwC Nigeria, highlighted the importance of these funds in supporting economic activities on the continent, shedding light on the significant contributions of the diaspora. Nevin explained that while the official number of Nigerians in the diaspora stands at 1.2 million, the actual number is much larger, with an estimated 15 million Nigerians living abroad, many of whom send remittances back home. The diaspora community extends beyond the USA and the UK to include countries like Canada, Germany, and the Netherlands, contributing to the economic development of their home countries. Nevin emphasized the success and economic power of the Nigerian diaspora, noting that they earn more on average than the average American, showcasing their potential to drive growth and development in Nigeria. The recognition of the diaspora's importance and the need to measure and leverage their contributions have gained traction in recent years, with a growing acknowledgment of their role in supporting African economies. Nevin highlighted that remittances are a stable source of income, constituting over 6% of Nigeria's GDP, challenging traditional economic perspectives that view remittances as mere gifts. The growing trend of African countries benefiting from diaspora remittances, as seen in countries like Egypt, underscores the global nature of this phenomenon. Nevin pointed out that countries like the Philippines and India also rely heavily on remittances from their diaspora communities, showcasing a widespread reliance on these funds across the world. The accelerated exodus of skilled professionals from Sub-Saharan Africa has further emphasized the importance of harnessing the potential of the diaspora. Nevin highlighted that countries like Egypt and Nigeria are experiencing brain drain, as highly educated individuals seek opportunities abroad due to limited prospects at home. Despite this migration, there remains an opportunity to engage and leverage the diaspora for the economic development of their home countries, as seen in the significant remittance flows from professionals abroad. Nevin acknowledged the cultural aspect of supporting extended families in African communities, noting that many diaspora members feel a sense of duty to send money back home to support their loved ones. The growing recognition of the diaspora's economic impact on African economies signals a shift in how these contributions are perceived and valued, emphasizing the need to foster closer ties and collaboration between countries and their diaspora communities for sustainable development.