Migrant Remittances – Poverty Nexus in Nigeria: The Moderating Role of Financial Development

Omosuyi O and Akinbobola T

Published on: 2023-10-06

Abstract

Given the risen migrant remittances inflows into Nigeria and in comparison, with African countries, this study investigates the impact of migrant remittances on poverty and the moderating effect of financial development on migrant remittances – poverty reduction utilizing DOLS from 1981-2021. Also, CCR and FMOLS techniques were also employed as robustness checks to authenticate the consistency and veracity of the DOLS results. Similarly, we introduced three indicators of financial development (financial institutions efficiency index, financial institutions depth index and financial institutions access index) in separate models using DOL, FMOLS and CCR. The results established that migrant remittances significantly damped down poverty\ in Nigeria. The findings further indicate that overall financial development and its other three indicators (financial institutions depth index, financial institutions access index and financial institutions efficiency index) in Nigeria considerably intensify the reduction effect of migrant remittances on poverty. From the policy perspective, it can be recommended that Nigerian policy makers should put in place down-to-earth policies to attract more remittances via formal channels as this will complement domestic investment, financial development, particularly banking sector and consequently reduce poverty. This can be achieved by allowing migrants to own repatriable international accounts with the local banks to deposit into it even when in overseas. Policymakers in Nigeria should also take pragmatic steps to strengthen financial framework such as developing robust domestic banking systems in terms of financial institutions access, depth and efficiency, which will facilitate remittance inflows and encourage both senders and recipients to transfer, save and invest it into productive investment. This will in turn create job opportunities and consequently reduce poverty in Nigeria.