FOREIGN REMITTANCES AND ECONOMIC GROWTH IN NIGERIA

Abstract

The study investigated the contributions of foreign remittances on economic growth in Nigeria from 1980 to 2021, using the multivariate ordinary least squares (OLS) technique to analyze the impact of foreign remittances on economic growth in Nigeria. Findings reveal that foreign remittance has no substantial effect on economic growth while workers remittances and FDI has a positive statistically significant impact on economic growth. Exchange rate was found to have a negative and statistically significant impact on economic growth in Nigeria. The results further showed that no causality from foreign remittance to economic growth while no causality was also established between economic growth and foreign remittances. The study hereby concludes that workers remittances, FDI and exchange rate are the major driver of economic growth in Nigeria. The study therefore recommends the need to for the Nigerian government to come up with policies that promote reduction of bank costs associated with receiving workers remittances to boost use of formal financial channels which will in turn improve economic growth. There is need to strategically harness the contribution of workers’ remittances by ensuring that the money is spent on locally produced goods instead of imported goods so as to ensure a positive relationship with economic growth in Nigeria.Policies that will improve the efficiency and reliability as well as reduction in the cost of transfers of remittances should be implemented in order to encourage more inflow of remittances to the Nigerian economy.