By Anthony Otaru, Abuja
Stakeholders have expressed worry that the over $20bn Diaspora inflows to Nigeria’s economy are at risk of decline as the United States begins the deportation of Nigerian illegal immigrants.
They warn that the deportation order should be a major concern for the Central Bank of Nigeria and, by extension, the Federal Government, whose responsibility is to properly manage the shocks and save the naira from further depreciation.
According to them, if not correctly managed, the government may not be able to cope with the foreign exchange dynamics to favour local currency against the dollar.
Recall that the newly elected President of the United States of America, Donald Trump, not too long ago, had announced the deportation of illegal immigrants currently living in the US.
He has also directed security agencies to carry out the order; this unfortunate incident is expected to affect at least 6,000 Nigerians.
The latest World Bank Migration and Development Brief Report, obtained by This Nigeria, shows that Nigeria raked in over $20bn in 2023 from Diaspora remittances, which is a third of the total inflows to Sub-Saharan Africa for the year.
According to the report, Africa reached $54bn in 2023, of which Nigeria accounted for 35.19 percent. Remittance incomes, which make up significant parts of the economy, include children’s school fees, houses built, rents, and sick people treated in hospitals, among other things.
Pundits, however, believe that without the inflows, multidimensional poverty, which affects more than 133 million Nigerians, would have been worse.
The report also reveals that about 17 million Nigerians are in the Diaspora, and over 400,000 of them are in the United Kingdom as of 2020 and 2023.
*Stakeholders warn unemployment may rise with return of illegal immigrants
Speaking with ThisNigeria in Abuja, the President of the Institute for Fiscal Studies (IFS), Godwin Ighedosa, said that the remittances from different countries, especially from the US, will indeed be reduced because most of the funds come from people who are working there.
According to Ighedosa, “It is significantly clear that even the numbers that I am hearing—about 6,000 that would be deported—is a major concern for the Central Bank of Nigeria and, by implication, the government as well. This is because lots of money comes into the country through them.
“There is this argument in the past that most of these funds are remitted back home to fund welfare economies, which is like sending money to their relatives back home in support of family well fare, but the fact remains that the government would have been targeting these monies long ago for business establishments rather than just for welfare economies, we have not just taken advantage of that to ensure that our people fund businesses rather than for consumption.
“This has become a significant issue and risk because the more people return home, the more our remittances will continue to decline. Unfortunately, I have been told that some other countries in Europe are planning the US way to deport illegal immigrants, and this is a significant threat to our Diaspora earnings; it will have a broader and negative impact on the economy in terms of foreign exchange dynamics and the overall exchange rate mechanism.
“It is clear that Nigeria’s foreign exchange earnings will be seriously affected whether the funds sent home are for welfare or industrial economics. It does not matter, but the more money coming into the system, the more generally you are able to stabilize forex.
“Remember that the more dollars you have in the system will help boost the position of the naira. If the dollar becomes scarce due to the decline in Diaspora earnings, there would be pressure on the naira again. It is an issue the CBN and the federal government should be concerned about.”
For his part, Sheriffdeen Tella, an emeritus Professor of Economics, said that President Donald Trump’s deportation action will have some negative effects on Diaspora remittances from Nigerians in the US, adding that the magnitude will depend on which areas the remittances have largely been coming from.
The Professor of Economics explained that the reductions would be small if the remittances were mainly from Europe.
He, however, queried if such remittances played significant roles in our spending or budgeting.
In his view, the Lead Director of the Centre for Social Justice (CSJ), Eze Onyekpere, said that the effects or reduction of Diaspora remittances will depend on the number of people working outside our shores.
He said the number of illegal Nigerian immigrants in the US, estimated at 6,000, showed that the decline in Diaspora remittances looks small when compared with those of them who are working in other foreign countries.
Onyekpere expressed optimism, “Even though the deportation might affect remittances, it is not going to be on a large scale but with minimal effects. It is not going to be a major blow. That is the way I look at it. The illegal immigrant figure of Nigerians in the US may not be the ones earning good money from their place of work because they are illegal residents, so the effects are not going to be substantial.
“Other negative effects that the deportation poses for Nigeria include an increase in the number of those looking for employment and an increase in the number of those who needed services like health, education, and infrastructural facilities. At least, it is not the best for our country, but you cannot illegally enter another person’s country and expect the person to bear it. Remember that US law enforcement is working very well.
*Urge FG to improve on infrastructure, health, education, push for industrialisation to create jobs
Onyekpere advised the Federal Government to look inward at job creation.
“It is now left for the Nigerian government to look inwards and ensure a turnaround on the leadership side that will necessitate improvement in overall development. We need to be self-reliant and create opportunities for the citizens so they can work and pay their bills, and there will be no need to look for foreign opportunities; just provide such for Nigerians, and the mad rush to travel outside for greener pastures would seize.”
