Migrant Remittances and Human Capital Development in Nigeria

Abstract

ABSTRACT: This study examines the impact of migrant remittances on human capital development in Nigeria between 1990 and 2024, using the Human Development Index (HDI) as the primary metric of socio-economic progress. Specifically, it investigates the effects of personal remittances, institutional quality, and government education and health expenditure on HDI. Secondary time-series data were obtained from the World Development Indicators, the Central Bank of Nigeria Statistical Bulletin, and the Worldwide Governance Indicators. The study employed the Engel-Granger cointegration technique and an Error Correction Model (ECM) to estimate both short-run dynamics and the long-run equilibrium relationship. Empirical findings revealed that remittance inflows and institutional quality have positive but statistically insignificant short-run effects on HDI. In contrast, government expenditure on education and health demonstrated a strong positive and significant short-run impact. The study confirms a significant long-run cointegrating relationship among the variables, with an error correction mechanism indicating that approximately 19% of short-run deviations are corrected annually. It concludes that while remittances are substantial, their translation into tangible human development is not immediate, and effective government social spending is critical for short-term gains, with institutional quality providing the essential long-run framework. The study therefore recommends policies to channel remittances into productive human capital investments, enhance the efficiency of public social expenditure, and implement foundational governance reforms to strengthen institutional quality.