THE RELATIONSHIP BETWEEN REMITTANCE NET FLOWS AND ECONOMIC GROWTH IN NIGERIA
1.1Background to the Study
Migration has become an important strategy for household subsistence. Through migration, households have boosted their welfare level due to the remittances that migrants send back home to their families. Remittances have also become significant private financial resources for individuals in countries of origin of migrant (UNCTAD, 2011). The magnitude of remittance flow usually affects both the host and the receiving countries. For the host countries, remittance is seen as outflow while, the receiving country, see it as inflow. The net flow of remittances in any nation shows how that country has gained from liberalization. Remittances allow households the opportunity to diversity their income source, hence hedge against risk and increase their economic wellbeing (Nyarko and Kwabena, 2010). In doing this the net flow of remittances becomes a source of increasing economic capita growth rate of any country.
In Africa, Nigeria, as the most populated country, plays a key role in its migrations. She has become increasingly involved in international migration to Europe, the Gulf countries and South Africa, yet Nigeria is also a source and destination country migration within west-Africa
(Adepoju,A.Van Naerssen,T and A Zoomers,2006). Considering the key role Nigeria plays in African migration systems, its role as destination, transit and source country, and considering the fact that it is both confronted with the negative and positive dimensions of migration; improved systematic insight in the views and interests of Nigerian state and non-state stakeholders is essential in designing more effective migration and economic capita growth (Afaha, 2011).
On the other hand, Remittances have become significant private financial resources for households in countries of origin of migration although they cannot be considered as a substitute for foreign direct investment (FDI), official development assistance (ODA), debt relief or other public sources of finance for growth. Evidence from the World B1ank Migration and Remittance Factbook (2011) shows that in Africa, Nigeria was ranked sixth and fifth in emigration and immigration respectively. This shows that the net flow of remittance as well as the liberalization and total remittance of earning prevalent in the country will be of major source of concern for the Nigeria.
Evidence from World Bank Development Indicators (2007), shows that the stock of Nigerian emigrants in some selected developed countries from 1977 to 2008 shows that Nigerians emigrated more to Italy from 1977 to 2005, except between 1990 to 1995 where US toppled for a while. The dominance of the destination of Nigerian emigrants to US also resurfaces again between 2005 to 2008 as can be seen below on table 1,1.