Diaspora Remittances and Economic Growth in Nigeria: An Auto Regressive Distributed Lag (ARDL) Approach

This paper examines the impact of diaspora remittances on Nigeria’s economic growth between 1990 and 2024, emphasizing the role of remittances as a non-debt source of development finance. Using annual time series data obtained from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS), the study employs the Autoregressive Distributed Lag (ARDL) approach to assess both the short-run and long-run dynamics among remittance inflows, real gross domestic product (RGDP), gross fixed capital formation (GFCF), government expenditure (GEX), trade openness (OPEN), and exchange rate (EXR). Empirical results reveal a significant and positive long-run relationship between remittances and economic growth, suggesting that diaspora inflows contribute meaningfully to Nigeria’s development trajectory. GFCF emerges as the most substantial long-run driver of GDP growth, while the exchange rate exhibits an insignificant impact. The findings underscore remittances’ stabilizing role in mitigating currency shortfalls and macroeconomic fluctuations. However, the results also indicate that sustainable growth requires channeling remittance inflows into productive investment rather than consumption. The study concludes that policymakers should promote financial inclusion, formalize remittance transfer systems, and develop incentives that encourage diaspora resources to support capital formation and enterprise development in Nigeria.

Diaspora remittances, economic growth, ARDL model, capital formation, Nigeria, diaspora finance, development economics.

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