The Effects of Remittances on Poverty in Nigeria
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Date
2026
Authors
Babajide Fowowe
Mohammed Shuaibu
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
This study conducts an empirical investigation of the effects of remittances on poverty in Nigeria. We rely on a computable general equilibrium (CGE) model where policy scenarios that reflect changes in remittances are simulated, thereby making it possible to identify the impact of remittances on poverty. The results revealed that a negative remittance shock occasioned by the launching of the $300 million diaspora bonds by the Federal Government led to an increase in the level of poverty. Also, our results showed that the impact of a positive remittance shock through the reduction of remittance transaction costs led to a reduction in poverty. The effect was primarily transmitted through the income and consumption channels. The results underscore the crucial role of remittances in helping to smooth consumption and ameliorating poverty in Nigeria. Design appropriate policies that seek to facilitate the flow of remittances more reliably and at the lowest cost, develop remittances-related products (i.e., savings, insurance contributing to social protection for households), and foster access to financial and business services, thus stimulating the local economies. Thus, a set of key features that lead to cost-related inefficiencies, such as weak infrastructure, low competition, and financial regulation constraints, needs to be addressed. The study concludes that remittances cannot be exclusively relied upon for ameliorating poverty, rather it should be used to complement other programmes.