Dynamic Effects of Migrant Remittances on Macroeconomic Variables in Nigeria (1981-2016)

The growing number of Nigerian migrants abroad in recent times and the resultant effects of their remittances on the economic well-being cannot be ignored. In this study the dynamic effects of worker’s remittance flow into Nigeria on macroeconomic indicators were investigated. The study employs annual data for the period 1981-2016 using Structural Vector Autoregressive (SVAR) model to analyse the effects of migrant remittances on key macroeconomic variables- Consumption Expenditure per Capita, Gross capital formation and imports. The analysis was carried out with the purpose of estimating their respective contributions to economic growth. Findings indicate that there is a positive but insignificant effects of remittances on economic growth largely induced by investment. The analysis further shows that, although the workers’ remittances are mostly used for private consumption and partially for imports. At the individual level, it provides immediate income for different households and can be used as a brake on poverty. However, migrant remittances contributes majorly to economic growth through the multiplier effects of investment. The study therefore concludes that Migrant Remittance can be a propeller to economic growth as well as economic development in Nigeria, if financial institutions are well organized and be made more competitive to provide remittance services at reduced cost, so that funds can be remitted through official channels. In addition people should be encouraged to invest larger proportion of such funds in productive sectors of the economy.