A recent World Bank report stated that a combination of rising unemployment, booming demographics, and unfulfilled aspirations have resulted in increased pressure on young Nigerians to migrate in search of gainful employment outside the country. Specifically, the number of international migrants from Nigeria has increased 3.2x over the last 2 decades, while the number of persons eager to migrate has increased to 54% in 2020 from 36% in 2014. The desire to migrate remains higher among the unemployed (38%), youth (39%), secondary education graduates (39%), urban residents (41%) and post-secondary graduates (45%).
In our view, the elevated unemployment rate in the country, which is estimated at 33.3%, the highest on record, is a major factor driving increased migration. The infrastructural deficit remains a major downside to business operations and existence in the economy. These structural challenges, including epileptic power supply, insecurity challenges, government policies and regulatory risk, do not support business formation and growth, thereby reducing demand for labour.
On the other hand, despite the large population of over 200 million, deficient school curriculum and poor teacher's training have created an employable skill gap, which has resulted in the dearth of skilled labour in the market.
That said, the increased migration is positive for remittance inflows, with a positive pass-through on the FX reserve. For clarity, direct remittance in the country has averaged US$21bn annually over the last 10 years. The outlook for remittances in 2021 is positive, supported by the global economic recovery and the strengthened foreign labour markets. Overall, we expect both push factors like unemployment and pull factors such as improved social wellbeing to support migration from the country in the near term.