The capital that was already here

As I sat with a friend whose family relies heavily on the monthly influx of remittances from her brother living abroad, I was struck by the resilience of this financial lifeline. In Nigeria, diaspora remittances have become a vital source of support for millions of families, a fact that underscores the country's dependence on these international transfers. Each year, Nigeria receives roughly $20 billion in diaspora remittances, with a staggering 70% of this amount going directly to household consumption.

While the Nigerian economy grapples with the volatility of foreign portfolio investment, diaspora remittances have remained a steady source of capital, even in the face of currency crises and inflation shocks. In 2024 and 2025, Nigeria received $21.81 billion and $21.8 billion respectively in diaspora remittances, evidence of the country's diaspora community's unwavering commitment to supporting family and friends back home. This consistency is a far cry from the hot money that characterises foreign portfolio investment, which is often driven by short-term gains and an exit-oriented mindset.

Despite their potential, diaspora remittances are not being harnessed to their full potential. Currently, no diaspora bonds are operating at meaningful scale, and no FX-linked savings instruments are designed to tap into the savings of Nigerians abroad. This policy gap is striking, given the diaspora's demonstrated commitment to supporting the Nigerian economy. The pathway from a remittance transfer into a formal mortgage product or a Small and Medium-sized Enterprises investment is largely uncharted, leaving millions of families to rely on informal channels to access the capital they need.

Diaspora remittances are not speculative flows, but rather relationship-based capital that is driven by ties, obligations, and long-term attachment to what happens in Nigeria. This is what makes them a more durable source of domestic capital, with the potential to sustain millions of families and drive economic growth. In contrast, foreign portfolio investment is often driven by short-term gains, creating recurring pressure on the naira and exposing the economy to volatility.

As the Nigerian economy continues to grapple with the challenges of foreign portfolio investment, I predict that the government will begin to focus on harnessing the potential of diaspora remittances. This could involve the creation of diaspora bonds and FX-linked savings instruments that tap into the savings of Nigerians abroad. With the right policies in place, diaspora remittances could become a more significant source of patient capital, supporting economic growth and development in the long term.

In conclusion, Nigeria's reliance on diaspora remittances is not a new phenomenon, but rather a long-standing reality that has been underutilised for too long. As the country looks to diversify its capital strategy, it would do well to focus on harnessing the potential of diaspora remittances, which have consistently demonstrated their commitment to supporting the Nigerian economy.