EFFECT OF REMITTANCE INFLOWS ON TRADE BALANCE IN NIGERIA (1987– 2023)

Abstract

Remittance is the portion of migrant workers earnings sent to their countries of origin and this could be in cash or gifts. The study investigates the effect of remittance inflow on trade balance in Nigeria. Specifically, the study examined the effect of migrant workers remittance on the Nigerian trade balance, determine the effect of embassy/high commission employee remittance on the Nigerian trade balance, ascertain the effect of military personal abroad remittance on the Nigerian trade balance and evaluate the effect of international aid workers remittance on trade balance in Nigeria. The study employed econometric techniques, including Augmented Dickey Fuller Tests for Unit Roots and the Ordinary Least Squire for testing hypothesis. The results of the Augmented Dickey Fuller Stationarity Test confirmed that all the variables, Trade balance, migrant workers remittance, embassy workers remittance, military personnel abroad remittance and international aid workers remittance used in this study are stationary at level, in the order of 1(0).The result of the Ordinary Least Squire indicates that migrant workers embassy workers, military personnel abroad and international aid workers have positive and significant effect on trade balance. The study concludes that remittance inflow have positive on trade balance in Nigeria within the period under review. Amongst the recommendations is that government should improve on the operational environment and regulation of remittance service, particularly as they relate to improving competition, reducing charges, improving access and enhancing the use of remittance proceeds in order to deepen the financial sector development and sustain momentum for growth. There should be strong communication and financial education campaigns to build trust and understanding of investment features, and market research to align investment conditions with the financial goals and capabilities of migrants. Public authorities and civil society should identify problems and opportunities, understand market facilitation needs and implement subsequent coordinated policies. Government should establish a Civil Society Fund on Aid Effectiveness, Results and Accountability to support the review and independent accountability function of national civil society organizations in aid effectiveness for results and accountability