Diaspora remittances, money transfers by migrants to their region or country of origin, are becoming increasingly important to the economies of a number of African countries. In Nigeria for example, remittances of about US$35 billion were expected in the last year. Diaspora remittances are the second biggest source of foreign exchange for Nigeria, and according to the World Bank migration and remittance brief, it is the largest remittance market in Africa and fifth in the world.
The majority of these diaspora remittances are sent by migrant workers, who will send money to their home country to help support their families. By injecting cash into otherwise economically suppressed regions, these remittances are often essential for health, education, and enterprise in poor or rural areas.
Both households and governments stand to benefit from remittances by Africans who are living and working outside of their home countries. According to the World Bank, remittances by these African migrants enable poor households to support between 10 and 100 people, while boosting their healthcare and education spend. Remittances therefore play a key role in poverty alleviation and human development.
Furthermore, remittances can improve a country’s flow of foreign exchange reserves and promote long-term economic growth. Since remittances generally go to low-income groups, they can also be encouraged to save part of this income and in so doing, achieve a measure of financial literacy.
With regards to businesses, small and medium enterprises (SMEs) are vital to economic growth. However, enabling entrepreneurship in African countries like Nigeria poses a huge challenge because there is a lack of affordable and available financing. With Nigerian banks charging as much as 25% interest on loans, a prospective entrepreneur’s financing options are rather limited. Diaspora remittances, however, present an opportunity for SME financing.
Western Union, one of the leading global remittance service providers, offers the African diaspora fast, reliable and convenient ways to move money across the globe. Over the past two decades Western Union and the Western Union Foundation have introduced various corporate responsibility programs in Nigeria.
With agents throughout Africa, most of which are banks and postal institutions, and more than 500,000 agent locations in over 200 countries and territories worldwide, Western Union is one of the African market leaders when it comes to diaspora remittances.
The Company has established a remarkable network of more than 5200 Agent locations in Nigeria since its operations started there in 1996. Keeping up with technology changes, Western Union also provides its consumers with digital options of seamlessly transferring money via its website or app.