The development outcomes of remittance inflows to Nigeria: the case of the Southeastern Geo-political zone

Abstract

ABSTRACT Remittances to Sub-Saharan Africa (SSA) constitute a critical lifeline for millions of individual households. It is on record that these large transfers enable recipient households to raise their living standards beyond vulnerability and subsistence levels. Unfortunately, the development potentials of remittance income are seldom factored into most pro-poor targeting programmes in many SSA countries like Nigeria. This is largely due to the problems of data inconsistency as well as those related to lack of precise information on how remittances are received and spent. Using novel survey dataset involving 450 remittance recipient and non-recipient households collected in the Southeast Geopolitical Zone of Nigeria, the study uncovers significant evidence of the impact of remittances on household expenditure and povertyusingpropensityscore matching (PSM). Specifically, households that receive remittances invest between NGN186,000 (US$1,240) and NGN205,000 (US$1,366.7) more in building constructions, land acquisitions and also invest over NGN60,000 (US$400) more in household business enterprise compared to non-recipient households. Similarly, the estimated impact of remittances on poverty shows that household poverty is lower by between 30.3% and 33.6% considering the results from all the three PSM matching estimators. The differences between the recipients and non-recipients are statistically significant. The implications of the findings are discussed in terms of pro-poor targeting programmes in Nigeria.