Diaspora remittances: A pathway for national development - VANGUARD
BY Dr Omaghomi Ofioritse
A pathway for national development depends on the recognition of how we entice, nurture and manage our second source of foreign exchange which is: diaspora investments. To put this in perspective, we once had two major sources of foreign exchange: The ship carrying the first source (Crude Oil) has sailed off and may well be gone in as little as five to seven years time! harsh prediction you might say but consider the reality below.
Globally, oil demand is projected to increase from nearly 100 mb/d in 2019 to around 109 mb/d in 2045: according to OPEC (Oil Exporters) world oil out look 2020. This is a 9% increase in world demand over a 25 years period. On the contrary, Goldman Sachs believes that the widespread reliance on electric cars, slower economic growth and decline in plastic production could make global oil demand max out at (2030 ) ten years from today as against OPEC’s self prophecy of 25 years.
Let’s just look at how this affects Nigeria; in 2045 Nigerian population is projected to be 365 million and this is almost an 82% increase in population size in 25 years, this is a massive 9 times the percentages increase for global oil demand for the same time frame. It goes to show that oil money will increasingly be too little to sustain Nigeria’s massive population going forward, more so the present situation where dozens of Nigerian oil vessels are roaming international waters looking for buyers.
The problem of over supply of crude oil is largely brought about by better drilling technologies; like shale oil techniques, making the US to ramp up its oil production to close to 20% of global oil production, compared with Nigeria’s 2%, there is also better prospecting technologies enabling more countries to discover oil in the last decade ; oil producing countries are now around 100 ; that is approximately half the countries of this world having oil, this reality increases global oil supply and at the same time reduces the demand for imported oil in these countries, presently Nigeria has gone into recession twice in four years and we may just stay in recession waters a little while longer, if oil continues to remain 90% of our export potential. This has clearly shown that oil as a means of sustaining Nigeria is a dwindling option ; a sailed ship.
Now to the Good news:
In 2018, Nigeria’s foreign exchange earnings from diaspora remittances equalled the total petroleum foreign exchange earnings. This was when there was no stimulus from the government, enticing our diaspora populations, imagine the situation when there is a conscious synergy between the government and the diasporas, coupled with trust for the Nigerian government and clear, simple and stable policies thrusts; we might be looking at diaspora foreign exchange of three to five times of our present oil earnings and this may be sustainable for many years to come.
Let’s talk about diaspora remittances/ foreign exchange cash potentials:
At independence the western region gave free, quantitative and qualitative education to its people while the eastern region tried their very best to surpass the Ibadan Government in education just as some northern academia followed suite. There was a trend in the 1960s to the 1980s where highly educated Nigerian citizens went to Europe and America to study and work. Entry visas wasn’t an issue back then. Even United Kingdom was visa free to Nigerians.
The trend continued up until 2016. However,with time, travel processes kept on getting increasingly more difficult for Nigerians. From 2016/2017 western countries started a near total blanket refusal for tourist visas and ever since that time, EU embassies only gave small amounts of study or work visas, and although the Canadian, US, Australia and Middle East route showed some promise, even that leeway is presently showing signs of constricting. What this means is that eventually our diaspora population will stop increasing in size.
The huge diaspora working class may not keep expanding forever. The illegal migration route is being shut out, as the desert and subsequent Mediterranean sea routes are now being increasingly policed.
There is also the fact that, in twenty to thirty years from now, the diasporas that were born in Nigeria would have retired from working life or may have moved on to be residents of care homes and their kids; whose entire lives have been in western countries would have little or no allegiance to Nigeria and so, may not be sending money back home to Nigeria owing to the fact that they were born overseas.
It does seem that like oil, the diaspora source of foreign exchange will not last forever! We pray it does. Having learnt our lessons from the wasteful plundering of oil wealth, we must now put in motion, machinery to harness and efficiently utilize this diaspora foreign exchange, optimally.
How to harness the diasporas remittances:
The first thing is not to allow the diasporas see us for what we were: “A nation that had no viability and hence a drain of dollars/ money of whatever kind” If they lose confidence in this nation; they would cease to make remittances to Nigeria because notwithstanding their burning patriotic fervour and nationalistic zeal, donor fatigue would rapidly set in, as nobody likes to keep pouring money into a waste drain.
To gain the confidence of our diaspora population, we must shrink the unproductive sizes of our towns, greatly reduce the size of our bureaucracy, drastically reduce the number of political office holders and make the Nigerian governing system transparent, easy, efficient and timely. Hopefully, if well harnessed, this limited time frame diaspora foreign exchange resource would be able to do what we couldn’t do with crude oil money: which is the ability to develop the agricultural, manufacturing potentials of Nigerians and also put the necessary infrastructures in place to catalyze and sustain the creative potentials of Nigerians.
For us to succeed, there must be clear cut guidelines that make for simple, measurable, time bound, sustainable and production oriented society.. The specific high yielding investment opportunities in Nigeria that the diaspora can undertake are in areas like agriculture, industry, high rise city accommodation, provision of amenities like rails and healthcare services. For finer details please read our article titled “our city structure is the problem, how to make them work and practical funding solutions”. nigeriawealthadvisory.com.ng
This is intended as a wake up call to the government of the day to put up policies to interest and partner our diaspora population for a sustainable rebirth of Nigeria. The exact same way, the Indians have used diaspora might to build their health care, manufacturing and computer/ electronic industries. We can do the same, it only requires planning and vision on the path of government. There are some ongoing diaspora initiatives and I have tried to get involved in a few.
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