The United Nations Development Programme (UNDP) recently engaged the Nigerian Diaspora at the 2024 Nigerian American Business Forum (NABF) conference, focusing on opportunities for diaspora investment in Nigeria. The forum highlighted lucrative investment prospects in the country and explored the potential of leveraging diaspora finance for sustainable development. Emphasizing the critical role of the diaspora, the discussions centred on how diaspora investments can advance Nigeria's national development aspirations.

Ms. Elsie Attafuah, representing Ms. Ahunna Eziakonwa, UNDP's Assistant Administrator and Regional Director for Africa stated: "We must invest in the future of Nigeria’s development. When we invest, we are not just supporting people and their livelihoods; we are sowing seeds for the future of Nigeria, Africa, and the world. A prosperous Nigeria means a prosperous Africa, which ultimately benefits the world."

The financing crux

Today's global landscape is a whirlwind of crises, uncertainties, and transformative mega-trends exacerbated by the COVID-19 pandemic, climate change, and regional conflicts. These disruptive forces have profoundly impacted development financing, leaving many countries, including Nigeria, struggling to keep pace with the Sustainable Development Goals (SDGs). Despite the pressing need for innovative financing solutions, there is a stark disparity: while global Foreign Direct Investment (FDI) reached $1.37 trillion in 2023, investments in developing countries dropped by 9% to $841 billion. This discrepancy underscores a critical issue: finance is not reaching where it is most needed.

Nigeria, with its ambitious Development Agenda, faces a formidable financing gap. Even pre-COVID estimates pegged the SDG financing need at $347 billion by 2030. In 2021, post-COVID, the IMF estimated an additional spending requirementamounting to 18% of GDP by 2030. Despite these staggering figures, public revenues in 2023 amounted to a mere 9.4% of GDP, highlighting the urgency for alternative financing mechanisms. 

Mobilizing diaspora to advance national development

The Nigerian diaspora emerges as a pivotal force for sustainable development, contributing expertise, remittances, and investments. Their knowledge, networks, and tailored solutions significantly impact local development and national growth. Remittances alone, totaling around $20 billion annually, represent approximately 4% of Nigeria's GDP, outstripping net inflows from Official Development Assistance (ODA), Foreign Direct Investment (FDI), and Foreign Portfolio Investment (FPI) combined. This underscores the diaspora's crucial role in Nigeria's economic landscape. 

Opportunities for diaspora investment in Nigeria

Nigeria is laying out a welcome mat for its diaspora with structured mechanisms designed to foster investment back home. Initiatives like the Diaspora National Housing Fund (NHF) Mortgage Scheme, the Diaspora Trust Fund, and the prospective issuance of Diaspora Bonds are paving the way for Nigerians abroad to channel their savings into impactful ventures. These efforts are creating tangible opportunities for diaspora investors to contribute to Nigeria's economic growth and development.

Other strategic investment opportunities aligned with Nigeria’s development priorities are outlined in Agenda 2050, the National Development Plan (NDP) 2021-2025, the 4D Foreign Policy Model, and the Renewed Hope Agenda. These strategic areas offer promising avenues for financial returns while contributing to Nigeria's sustainable development and economic transformation. Key areas include:

1. Economic Growth and Diversification: Nigeria is on a mission to achieve 7% growth and become a $1 trillion-dollar economy by fostering robust growth in Micro, Small, and Medium Enterprises (MSMEs), industrialization, digitization, and innovation. Diaspora investors can seize opportunities by providing venture capital and private equity, facilitating the creation of tech hubs and innovation centers, nurturing startups, and accelerating digital transformation.

2. Infrastructure Development: Priority is placed on investment in infrastructure as crucial for Nigeria’s growth. This includes physical, financial, digital, and innovation infrastructure, as well as enhanced transportation and energy systems. Opportunities for the diaspora abound in renewable energy projects, expanding transportation networks, enhancing digital infrastructure, supporting financial technology solutions, and fostering innovation hubs.

3. Security Reforms: The Nigerian Government is also prioritizing security reforms to create a secure environment for citizens and businesses. Diaspora investors can play a critical role by developing surveillance and cybersecurity solutions, funding solar projects for key areas like markets and streets, investing in private security firms, and backing smart city projects and law enforcement training.

4. Human Capital Development: Nigeria’s future depends on its people. Investing in education, health, and social services is essential. Diaspora investors can support building and upgrading schools, funding teacher training programs, and developing digital learning platforms. In healthcare, opportunities include investing in infrastructure, medical research, telemedicine, and community health programs.

5. Governance Improvements: Effective governance by strengthening democratic values and the rule of law and ensuring a transparent and efficient government is seen as crucial for sustainable development. Diaspora investors can fund e-governance platforms, support anti-corruption initiatives, and improve public service delivery systems to facilitate this. 

6. Poverty Alleviation and Social Inclusion: Reducing poverty and minimizing regional disparities are key priorities for the government of Nigeria. Investment opportunities include funding microfinance initiatives, supporting small and medium-sized enterprises (SMEs), and investing in education and healthcare projects in underserved regions. 

7. Youth and Innovation: Nigeria’s youth are the driving force behind its future. Accelerating diversification through youth-driven industrialization, digitization, and innovation is a strategic focus for the government. Diaspora investors support this by funding youth-owned/led startups, establishing innovation hubs, providing mentorship, and investing in digital infrastructure and education programs. 

8. Food Security and Agricultural Development: Securing Nigeria’s food supply through agricultural innovation is vital. Opportunities include investing in modern farming techniques, sustainable agricultural practices, agro-processing facilities, and facilitating trade. 

UNDP, through the SDG Investor Maps, has also provided market intelligence to help the private sector identify commercially viable investment opportunity areas with significant potential to advance the SDGs that are aligned to national development needs. Nigeria's SDGs investor maps identifies 21 investment opportunity areas with commercially viable business cases across seven sectors: energy, agriculture, healthcare, infrastructure, technology and communications, consumer goods, and services. Ongoing support is being provided around investment facilitation across these sectors. 

Lastly, the 2024 NABF highlighted the strong appetite of the diaspora to invest in their homeland, despite concerns over the business and investment environment. In recent times, the Nigerian government has implemented several policies, regulations, and institutional reforms to strengthen Nigeria’s economic and business landscape—including foreign exchange market reforms, energy sector reforms, and other real sector initiatives. However, sustained efforts are imperative to translate this diaspora interest into tangible investments that yield substantial developmental outcomes. 

Presented on behalf of the United Nations Development Programme (UNDP) by Precious Akanonu – National Economist, UNDP Nigeria, with additional insights from Tony Muhumuza, Economics Adviser, UNDP Nigeria.