The capital that was already here

Running a cross-border payments company means constantly watching money move—where it comes from, where it goes, and what happens after it arrives. One figure keeps coming back to me: Nigeria receives roughly $20 billion annually in diaspora remittances, and about 70% goes directly to household consumption.

That spending sustains millions of families. The remaining 30% is spread across savings, housing, business investment, and other asset accumulation. Unlike portfolio capital, much of it is tied to long-term decisions and relationships, making it a potentially more durable source of domestic capital. That raises an important question: are diaspora remittances Nigeria’s most underutilised source of patient capital?

For much of the past decade, Nigeria’s external capital strategy has repeatedly leaned on foreign portfolio investment in fixed-income securities, a recurring pattern that has supported reserves in good periods but exposed the economy to volatility when those flows retreat.

In the first quarter of 2026, total capital importation into Nigeria was $10.37 billion. Of that total, foreign direct investment (FDI) accounted for approximately $135 million—just 1.3% of total capital importation. The bulk was portfolio investment, and while that has its uses-–it has contributed to Nigeria’s external reserves reaching roughly $50 billion in mid-2026, a meaningful milestone– portfolio capital has a particular character. It comes in because of an opportunity and leaves when that opportunity closes. It is, as I sometimes describe it, hot money: high-cost, exit-oriented, and sensitive to conditions in ways that might create recurring pressure on the naira.

Diaspora remittances, in contrast, came in at $21.81 billion in 2024 and maintained $21.8 billion in 2025, through currency crises, inflation shocks, and every difficulty that caused other capital to pause or retreat. The diaspora kept sending money home. That consistency reflects a different underlying motivation: these are not investors optimising a return horizon. They are people with ties, obligations, and long-term attachment to what happens here.

That is what makes diaspora remittances a different kind of capital. They behave less like speculative flows and more like relationship-based capital, which is precisely what makes the policy gap so striking.

Right now, no diaspora bonds are operating at meaningful scale, and no FX-linked savings instruments are built for Nigerians abroad. The pathway from a remittance transfer into a formal mortgage product or a Small and Medium-sized Enterprises investment vehicle is not straightforward – onboarding complexity, Know Your Customer burden, unclear tax treatment, all of it creates friction that pushes diaspora Nigerians toward informal channels, or leaves their funds in the household transfer bucket rather than converting them into invested capital.

The result is that a potential pool of long-duration, relationship-anchored investment sits largely untapped, even as policy resources continue to focus on attracting capital that, by design, will eventually leave.

To be clear, foreign portfolio investment and FDI have their place: liquidity, global networks, and, in the case of good FDI, jobs and technology transfer. The argument is not that Nigeria should stop pursuing them. It is that the diaspora has not been given equivalent policy attention, and the asymmetry does not reflect the relative stability and retention potential of those flows.

The practical steps are not complicated to identify, even if they require real commitment to execute. The first is building a credible suite of diaspora investment products, not pilot schemes that fade after an announcement cycle, but professionally administered instruments that diaspora Nigerians can actually trust: bonds, currency-linked certificates, infrastructure notes, pooled vehicles for housing finance and SME lending. The trust question matters as much as the product design.

From conversations I have regularly in this space, one of the main reasons diaspora capital stays in the household transfer lane is not a lack of interest in investing but a lack of confidence in the structures available. That is solvable, but it requires transparency and institutional credibility that have to be deliberately built. Trust cannot be legislated into existence; it has to be earned through transparency, consistent governance and demonstrable returns.

The second is reducing friction in formal channels. Right now, the informal route is often faster and cheaper than the formal one, and that alone tells you something. Transfer costs, onboarding complexity, KYC requirements designed for domestic rather than diaspora customers, and tax treatment that remains ambiguous for Nigerians investing from abroad—all of it pushes volume toward channels where it is harder to track and connect to productive use.

Closing that gap would shift meaningful flows into the formal economy without requiring any new capital to be created. And broadening access to platforms like the Pan-African Payment and Settlement System for licensed operators, not just banks, would open intra-African payment flows and reduce unnecessary dependence on dollar settlement for intra-African trade.

But the deeper thing is a shift in how the question gets framed. The dominant policy conversation about external capital asks how to attract more. That is reasonable. The less-asked question is what happens to what is already arriving–whether it stays, whether it circulates, whether it builds anything durable.

Nigeria does not need to discover a new source of external capital. One of its largest and most resilient sources already exists. The challenge is no longer attracting it; it is building the institutions that allow it to grow, circulate, and finance long-term growth.

Pelumi Esho is the Founder and CEO of Salmnine Holdings and 91 Payments. She holds an MBA from London Business School and is a CFA charterholder and a certified treasury and financial markets professional through ACI – The Financial Markets Association.

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