TREND ANALYSIS OF REMITTANCES, FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA

Abstract

This study analysed the trends of remittances, financial development and economic growth in Nigeria from 1979 to 2021. This was with a view to providing a clear understanding of the nature of the connection among the three variables as well as the policy direction to take with regards to remittances and financial development in order to enhance the growth process in Nigeria. Data on remittances and financial development were sourced from the 2022 World Development Indicators Database and Global Financial Development database, respectively. Data on real gross domestic product, as a measure of economic growth, were obtained from the 2022 World Economic Outlook (WEO) database. The trends analysis revealed that there was a partial co-movement between remittances and economic growth between 2005 and 2015, while the growth of the Nigerian economy was weakly related to the country’s financial development from 2016 to 2021. Findings also showed that the three variables exhibit the same pattern as the trends follow the same growth path especially between 2003 and 2021. These results reveal that complementing significant inflows of remittances with a well-developed financial sector will enhance the growth of the Nigerian economy. Based on these findings, the study concluded that the degree of connection or relationship among the variables is very strong. Therefore, the government needs to design effective policies that will boost the inflow of remittances and propel the development of the financial sector with a view to enhancing the growth of the Nigerian economy.