Do you know how to send money to Nigeria from the United Kingdom or any other country? In this article, we will walk you through the impact of remittances on the recipient country’s economy. Remittances can be defined as the transfer of money into another country by an expatriate or a migrant worker.
Poverty in the third world pushes many people out of their native lands to find jobs to lead a decent life. Although most of the people who travel abroad are unskilled people finding mostly labour jobs. The amounts they earn are in foreign currencies which become hefty when translated into local currencies of the concerned countries of migrant workers.
Now let’s take a look at how money transfer to Nigeria or another country impacts the country’s economy.
Clean money:- Remittances transfer directly into the recipient’s account without passing through a large number of channels. Therefore, remittances are considered to be clean money leaving little room for corruption or embezzlement.
Alleviating poverty:- A study spanning over three decades from 1981 to 2014 compiled data from the Asian countries and stated that even a 1% increase in remittances as a percentage of GDP (Gross Domestic Product) of a country can lead to a 22% drop in poverty level.
Savings in foreign currency:- With the help of remittances, people can save money and that too in a foreign currency. A study noted that after oil exports, remittances are the biggest source of USD income for Mexico.
GNI:- Online money transfer to Nigeria or any other developing country is a big source for increasing and strengthening the recipient country’s Gross National Income (GNI).
Liquidity of financial market:- An increased flow of remittances in the recipient country increase liquidity of the financial markets, which in turn pushes interest rates downwards and also expand credit and investments.
The consumed income:- Remittances are one of the few incomes which are consumed directly as soon as the beneficiary receives the funds in the country by adding to the Aggregate Demand (AD). Remittances also help boost a country’s economy through a multiplier effect.
Start-up funds:- Remittances are used as a source to fund start-up businesses within the recipient country. A report of the UK’s DFID depicted that the capital for 80% of start-up businesses in Somalia alone is financed from remittances.
Supplementing incomes:- For many countries, remittances are a guarantee against food insecurity and serve as a guarantee for shelter, clothes and other necessities.
Income gaps bridged:- The rural areas of countries receiving remittances from abroad witness acute income variations. These gaps between incomes within a society can be bridged through remittances.
Helping education: Third-world countries struggle with educating their populations. Through remittances, people manage to afford quality education for their children, which, in turn, secures a bright future for the country concerned.
Acquiring land:- Remittances help people acquire land and purchase a property which they cannot afford otherwise.
Job opportunities:- Remittances help people invest in different businesses in the recipient country, which helps create job opportunities for the jobless and unemployed.
Conclusion:- We have seen that remittances are a major source of income for third world countries and help them with a viable and sustainable economic activity in the remittance-receiving country. Do you want to send money to Nigeria online or your home country to support the economy?