Download complete project materials on Remittance And It’s Impact On Rural Household In Nigeria
CHAPTER ONE
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INTRODUCTION
1.1 BACKGROUNDS TO THE STUDY
A remittance is a transfer of money by a foreign worker to an individual in his or home country. Money sent home by migrants completes with international aid as one of the largest financial inflows to developing countries. Workers (remittances) are a significant part of international capital flows, especially with regard to labour exporting countries (wikipidia 2016).
In 2014 436 billion U.S dollar was send to developing countries, setting a new record. Remittances are playing an increasingly large role in the economies of many countries. They contribute to economic growth and to the livelihoods of less prosperous people. Remittances are financial resource flows arising from the cross border movement of nationals of a country (Kapur, 2004). Remittances come in form of money, assets or informal or non-monetary forms. Non-monetary forms may include clothing, medicine, gifts, dowries, tools and equipment.
According to World Bank (2011) more than 215 million people (3% of the world’s Population) live outside their countries of birth and over 700 million migrate within their countries. In the coming decades, according to World Bank (2011), demographic forces, globalization, and climate change will increase migration pressures both within and across borders. Then remittances sent home will be three times the size of official development assistance and these will provide an important lifeline for millions of poor households.
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In 2013, World Bank (2012) Reported that, $404 billion went to developing countries (a new record) with overall global remittances totaling $542 billion. The economic impact remains contested among researchers; however, remittance transfers do draw people towards the financial services that are available to them.
Nigerians living abroad, who remitted $21 billion home last two year, rank among citizens of the top five countries that remitted about $530 billion to their countries in 2012, showing a tremendous increase from the previous year. In the latest ranking by the World Bank, India led the pack, followed by China, Philippines, Mexico and Nigeria in the fifth position.
Figures show that India and China received $60 billion from their citizens abroad, Philippines ($24 billion), Mexico ($24 billion), and Nigeria ($21 billion). Others who also joined the top 10 include Egypt, the sixth largest, with about $18 billion remittance last year, indicating an astronomical surge from $9 billion in 2008. It is believed that the surge is perhaps driven by increased support by travelers to their families in the face of political uncertainty or savings brought by returning travelers.
Remittances to Sub-Saharan Africa remain broadly unchanged in 2012, grew by 3.5 percent in 2013 to reach $32 billion. Flows are forecast to rise to $41 billion in 2016. According to available official data, Nigeria remains the largest recipient by far, with travelers sending about $21 billion in 2013. Remittances to countries in East Africa continued to grow robustly last year, by 10 percent to Kenya and 15 percent to Uganda.
In contrast, West African countries, such as Cote d’Ivoire and Senegal, saw only modest increases in 2013, after a slowdown in 2012. Sub-Saharan Africa is one of the few regions in the world where official development assistance is larger than remittances, and both are much more stable than either foreign direct investment or private financing flows. Many countries in the region have large diasporas overseas, with substantial diasporas savings that could be mobilized for development financing.
For developing economies like Nigeria, overseas remittances are vital source of income for many households. The majority of overseas remittances are aimed at easing the financial situation of the households receiving the money. The World Bank (2010) report on Africa added a few countries account for a substantial share of remittances to Sub-Saharan Africa and North Africa and Nigeria is high ranking in the remittances chart.
The remittances to Nigeria, $10,045 billion equaled about half of all officially recorded remittances to Sub- Saharan Africa in 2010.” That is the estimated remittances flow into Nigeria from its people abroad were $10,045 billion in 2010 and $10,681 billion in 2011 and the expected remittance to flow to developing countries in 2012 is total $351, and worldwide remittances, including those to high-income countries, will reach $406 billion in 2012 World bank (2010).
Nigeria has a strong and growing Diaspora community, especially in the US, Europe and Asia, many of whom are responsible for this remittance flows. Nigeria qualifies as the 10th country on a list of the world’s most remittances recipient countries, with an annual inflow of remittances amounting to 4.5% of its GDP share (World Bank, 2010).
From 2000 to 2011 the Nigerian economy experienced the slowest rise in real GDP in Western Africa. During the same period, the country experienced a massive outflow of labour, with some 10% of the population living and working abroad by the end of 2010. At the same time, remittances received showed an upward trend. Nigeria has a high dependency on remittances and this is a challenge to the Nigerian economy (World Bank, 2010).
A perspective of understanding and addressing rural poverty is to see travelers as agents or instruments for promoting rural development through remittances (Brown, 1993). It is noteworthy that remittances as defined by (Brown, 1993) as a sum of money send especially by post, from one place or person to another for goods or services as an allowance.
Increasing attention is been paid movement as survival strategy of the poor, but given the effect of globalization, and the huge amount of money remitted each year, the focus of research has shifted towards the dynamics of poverty and remittances within the framework of movement (Brook, 2007).
The economic and settlement policies of Botswana’s national government from 1966 contributed considerably in creating employment opportunities that enhance internal labour movement. Households used these opportunities to send young men and women out to work (Lucas, 1982). It is noteworthy that remittance could be in a local, regional, national and international scale.
International traveler remit through formal and informal channels. The formal channel includes major Money Transfer Operators (MTO’s) such as Western Union, Money Gram, Gigante Express and Banks. In 2002, at least 90% of all remittances were transferred electronically or via money order (Orozco, 2002).
The impact of migration and remittances on sending households areas are more complex than initially though. However, remittances have been shown to compensate for the loss of labour effects by adding to income in the sending households as well as generating “income multipliers” in the remittance sending economies, by providing households with investment capital and increasing the demand for goods and services offered by others in the sending areas (Aldelman, Taylor, and Vogel, 1988; Subramanian and Sodoulet, 1990; Taylor, 2001).
In the past recent decades, especially international remittances, has become a very attractive source of foreign earning for developing countries. The large size of remittances relative to other external flows and to the gross domestic product (GDP) in many countries suggest that macroeconomic effects of remittances may be of critical importance to many countries (World Bank, 2006), and more so in developing countries like Nigeria where underdeveloped financial system and structural rigidities make the compilation and evaluation of such remittances difficult.
According to Adams (2005), despite the increasing size of international remittances to home country in developing countries, there has been little attention on examining the impacts of these remittances on the households in these countries and thus the economy at large.
1.2 STATEMENT OF THE RESEARCH PROBLEM
Income instability is of vital concern in many developing countries. Lack of reliable social insurance programs, inadequate liquid savings and binding borrowing constraints, particularly among poorer rural households, often translate into low living standards and poor prospects for escaping poverty. In that context, that is why people move out of their origin and relocate to another destination for a better living and remittances could prove rather helpful given their potential to stabilize household income.
In another way remittances could affect household decision-making is by impact on recipient households‟ decision on how much labor it should supply, depending on if the receiving households see it as more profitable to supply more leisure after the extra type of income or not (Jadotte, 2009). However, (Tayo, 2010) in her research on the effects of remittances on rural settlements with a case study of Magongo in Ogari/Magongo local government area of Kogi State. This research intends to analyse the impact of remittance to rural household in Igabi local government area of Kaduna State and non the researches are in the in study area
Remittance is known to be outcome of migration but is it only associated with positive impacts. And there be some adverse or hidden negative impacts of remittances on the sustainability of rural environment and economy. And another problems is delaying in remitting back home of people, delay in transferring of the remittance and how to use the remittances.
It generally reduce the level and severity of poverty and frequently lead to higher human capital accumulation, higher health and education expenditures, better access to information and communication technologies, greater financial access, small business investment and entrepreneurship.
In view of the forgoing statement, this work will be centered on the following questions.
1. What is the nature of remittance in Igabi local government area?
2. What are the incidences of remittance to rural household in the study area?
3. What is impact of remittance to rural household in Igabi local government area?
4. How are remittance used by the rural household?
1.3 AIM AND OBJECTIVES
The aim of this study is to assess the effects of migrants remittances on rural household in Igabi local government area. However, the objectives of the study are to:
1. examine the socio economic characteristics of the respondents
2. assess the factors influencing the rate at which migrant remit part of their income
3. examine the impact of money remitted on rural household
4. assess the problem affecting remittances
1.4 SIGNIFICANCE OF THE STUDY
The significance of this study is to provide an insight into rural households in the study area, generate information on remittance and it’s impact on rural household for proper implementation of policies and will thus be useful to town planners and private estate developers in finding a lasting and profitable solution to the economy in rural areas and Nigeria at large.
Furthermore, this research assesses the pattern of migration and development through remittances and how it has contribute significantly to the livelihood of people of Igabi local government area of Kaduna state. This is to point out the importance of remittance up-to-date and consisted view especially in some wards in Igabi local government area of Kaduna state.
This study will also expose the researcher to the acquisition of skill necessary for in-depth analysis on issues relating of remittance and its impact on rural household in Igabi local government area and Kaduna state at large. As an explanatory study, it is hoped that this work will make it possible to stimulate interest for further investigation and reconceptualization. It would also help the development of rural area and the nation at large.
1.5 SCOPE OF THE STUDY
The content scope of this research is broadened to cover, the reason why Igabi people leave their home, the reasons for remittance, utility of these remittances and the impacts of these remittances funds to their individual welfare and the community at large.
And is to focus on the following objectives (a) to examine the socio economic characteristics of the respondents (b) to assess the factors influencing the rate at which migrants remit part of their income (c) to examine the impact of money remitted on rural household. (d) to examine the problem affecting remittances.
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