SOURCE:

Faculty: Social Sciences
Department: Economics

CONTRIBUTORS:

Onwuka, F.A;
Onwuka, E.C;
Nwokoye, E.S;

ABSTRACT:

Given the rising share and rising importance of migrants’ remittances as well as the evidences that migrant remittance transfers have significant effects on receiving economies as debated by optimistic and pessimistic theories, quite a number of studies on remittances have focused on the socio-economic determinants of migrant remittances while others focused on the impact of remittances on economic growth. This study focuses on determining the macroeconomic determinants of remittances in Nigeria from the period 1970 to 2016. It specifically investigates whether interest rate, inflation rate, exchange rate, population growth, unemployment rate, real GDP and financial development determine the size of remittance inflows to Nigeria. Data for the study were secondary and were sourced from Central Bank of Nigeria Statistical Bulletin of various years and World Bank Development Indicators. Data were analyzed using the autoregressive distributed lag and vector autoregressive techniques. Our findings show that in the long run real GDP, financial development, unemployment rate and population growth had positive impacts on migrant remittance inflows, while inflation rate, interest rate and exchange rate impacted negatively on migrant remittances. In the short run, only real GDP, unemployment rate and exchange rate were found to be satistically significant. The impulse response function indicated that migrant remittances respond to shocks in these macroeconomic drivers (interest rate, inflation rate, exchange rate, population growth, unemployment rate, real GDP and financial development). Migrants are more willing to invest funds in Nigeria if inflation is moderated and exchange rate is reasonably stable.The study recommends among others, that since Nigeria receives large remittances, it needs to design appropriate policies to deal with possible macroeconomic shocks. Government should strengthen and deepen the financial reforms as well as encourage receiving households to either save larger shares of their remittances income in the formal money market or to direct remittances to growth oriented investments.