Effects of Diaspora Remittances on Balance of Payments in Nigeria

Sobere; Ugwem-oreibot Rufus; Isukul; Araniyar Chinedu; Odungweru; Kingsley; Nnana

doi:10.56201/jbae.vol.12.no9.2026.pg125.136

📄 Download Paper

Effects of Diaspora Remittances on Balance of Payments in Nigeria

Sobere, Ugwem-oreibot Rufus, Isukul, Araniyar Chinedu , Odungweru, Kingsley, Nnana

Abstract

This study examines the effect of diaspora remittances on Nigeria’s balance of payments over the period 1990–2024. The study employed the Autoregressive Distributed Lag modelling approach to examine the short-run and long-run relationships among the variables. The BOP serves as the dependent variable, while diaspora remittances , exchange rate , foreign direct investment , and gross domestic product were used as explanatory variables. The ARDL bounds tests confirmed the existence of long-run relationships among the variables. The long-run results revealed that diaspora remittances and exchange rate had positive and statistically significant effects on BOP, while GDP had negative and statistically significant effect on BOP. Foreign direct investment had a negative but statistically insignificant effect on BOP. The short-run results showed that the effects of the explanatory variables varied across periods, with several current and lagged effects being statistically significant. The error correction terms were negative and statistically significant, confirming the existence of adjustment mechanisms towards long-run equilibrium. The diagnostic tests further showed that the model was free from significant serial correlation and heteroskedasticity, while the residuals were normally distributed. Based on the results, the study recommends among others that the government should strengthen diaspora investment through an enabling investment environment by improving the ease of doing business and providing targeted incentives such as tax reliefs, investment guarantees, and dedicated diaspora investment schemes.

Keywords

Diaspora remittancesbalance of paymentsexchange rateforeign direct investmentgross domestic product

References

Adeagbo, O. A. (2024). Diaspora remittances and human capital development in Nigeria. AfricanJournal of Economic Review, 12(1), 88–104. Adeagbo, O. A. (2024). Diaspora remittances and human capital development in Nigeria. AfricanJournal of Economic Review, 12(1), 88–104. Aninwagu, V. O., & Nyeche, E. (2025). Impact of renewable energy consumption, forest area, and economic growth on CO2 emissions in Nigeria. http://dx.doi.org/10.2139/ssrn.5358945 Chude, N. P., Onodu, P. C., & Umeh, J. C. (2026). Diaspora remittances and balance of payments in Nigeria: Evidence from dynamic econometric analysis. Nigerian Journal of Economic Studies, 18(1), 41–63. Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica, 49(4), 1057–1072. https://doi.org/10.2307/1912517 Didia, D., Didia, B. U., & Ayokunle, P. A. (2018). Diaspora remittances and economic growth in Sub-Saharan Africa. International Journal of Economics and Financial Issues, 8(3), 33-41. Fleming, J. M. (1962). Domestic financial policies under fixed and under floating exchange rates. Staff Papers, 9(3), 369–380. https://doi.org/10.2307/3866091 Imouokhome, O. E. (2023). Migration, remittances and economic growth in Nigeria: An ARDL approach. Journal of Economics and Policy Analysis, 15(2), 115–133. International Monetary Fund. (2019). Balance of payments and international investment position manual (6th ed.). International Monetary Fund. Isana, A. A., Ademeso, O. A., &Maiyaki, M. A. (2025). Diaspora remittances and sustainable development in Nigeria. Journal of Sustainable Development in Africa, 27(1), 92–111. Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2018). International economics: Theory and policy (11th ed.). Pearson. Mundell, R. A. (1963). Capital mobility and stabilization policy under fixed and flexible exchange rates. Canadian Journal of Economics and Political Science, 29(4), 475–485. https://doi.org/10.2307/139336 Nangih, E., & Nwineewii, J. D. (2024). Diaspora remittances and human development in Nigeria. African Journal of Development Economics, 9(2), 102–119. Narang, S. (2020). Diaspora remittances, household consumption and investment in India. Journal of Asian Economics, 69, 101214. Nyeche, E., Aninwagu, V. O., & Odu, D. O. (2025). Effects of gendered education investment on economic growth in Nigeria. Asian Journal of Economics, Business and Accounting, 25(9), 1-12. Orekoya, O. O., & Tijani, A. A. (2023). Diaspora remittance inflows and human capital development in Nigeria. Journal of African Development Studies, 14(3), 44–60. World Bank. (2024). Migration and development brief 40: Remittances slowed in 2023, expected to grow faster in 2024. World Bank.

Effects of Diaspora Remittances on Balance of Payments in Nigeria

Abstract

Keywords

References

More Articles from JOURNAL OF BUSINESS AND AFRICAN ECONOMY