How investing abroad can help Nigeria grow, Commonwealth of Dominica
With the economic and political uncertainty that so many Nigerians are feeling about the upcoming elections, many affluent businesspeople are considering whether to continue investing their hard-earned money further in the country or invest elsewhere.
Risk diversification has always been on the minds of the affluent and, in some cases, investing elsewhere may actually have a positive impact back home in Nigeria.
How the diaspora has been supporting Nigeria
Nigerians are living across the globe. With a rising affluent class, more and more Nigerians are seeking investment, work, and living opportunities elsewhere. But this doesn’t stop Nigerians from investing back in Nigeria from other locations.
According to a World Bank report, Nigeria remains the largest recipient of remittances in the sub-Saharan region. It is the sixth-largest recipient among all low- and middle-income countries (LMICs), with an estimated amount of $23.8 billion received in 2019, an increase of more than half a billion compared with 2018. In comparison, Ghana and Kenya are ranked a distant second and third in the region, according to the report, with $3.5 billion and $2.8 billion received, respectivelyRemittances refer to the sending of money, and in this case, to money being sent to Nigeria from abroad.
According to a report by an international audit firm, migrant remittances translated to 83% of the Federal Government budget in 2018 and 11 times the foreign direct investment (FDI) flows in the same period. The report also states that Nigeria's remittance inflows was 7.4 times larger than the net official development assistance (foreign aid) received in 2017 of $3.4 billion.
These are no small facts. The impact that Nigerians abroad have on the country’s local development is enormous.
CBI as a diversification of risk
One way in which astute investors diversify risk is through obtaining citizenship in another country. Only a handful of countries in the world currently offer citizenship by investment (CBI). The longest-standing and most credible citizenship by investment (CBI) programmes are found in the Caribbean.
There are many benefits to having dual citizenship, including greater global mobility, new economic opportunities, a better quality of life, and improved personal security. Many families and entrepreneurs turn to CBI programmes as an alternative form of asset diversification.
Global uncertainty is driving the desire among wealthy individuals to incorporate second citizenship as part of their portfolios. However, countries offering CBI programmes still require that applicants be strictly vetted before being granted citizenship. This is to maintain certain standards of the CBI programme and to ensure that applicants comply with certain national and international standards to support safety and security, as criminal background checks are also included in the vetting process. The due diligence process of the Commonwealth of Dominica, which forms part of its CBI offering, is one of the best in the world.
Different countries award citizenship in different ways. Some countries award citizenship by virtue of birth in that country, descent from a parent who is a citizen, or by naturalisation, for example through marriage to a citizen or through an extended period of residence in that country. CBI programmes allow successful applicants to obtain citizenship by virtue of a significant investment in a country.
For example, the Dominica CBI due diligence process covers four steps: know-your-customer checks performed by local authorized agents; internal checks including anti-money laundering and counter-terrorism financing vetting by the Citizenship by Investment Unit; mandated international due diligence firms perform online and on-the-ground checks; and regional and international crime prevention bodies check that you are not on any wanted or sanctions lists.
For additional security, local Caribbean banks, including those in Dominica, also exercise their own vetting processes on each CBI applicant before allowing funds from the applicant to enter the local banking sector. As this forms such an important part of the success of each application, this vetting process is usually done before the applicant’s application is submitted to the recipient government’s CBI unit for processing. This dual process of vetting by the bank as well as vetting by the government agency in charge of CBI adds a necessary and additional level of security to CBI programmes in the Caribbean.
Supporting home from idyllic Dominica
For Nigerians, the Caribbean has been a drawing card for a long time. Some of the first Africans to reach the Caribbean islands arrived in the early 1500s and the Caribbean has been a popular destination for global travelers for hundreds of years. Nigeria has also been one of the most influential cultures in the region, with over 6 million people tracing their lineage back to Nigeria.
In Dominica, the government invests heavily in tourism to drive economic development, focusing on the island’s unmatched natural beauty, and the popularity of diving, hiking, wellness, and eco-tours. For Nigerian investors, Dominican banks are well-versed in international transfers and can manage a variety of business requirements, whether these are for transactions with those in Nigeria or elsewhere.
From Dominica, investors also save a lot on taxation. There is no taxation on capital and these savings can be sent abroad. Dominica also has no corporate, estate, or withholding taxes. There is also no taxation on gifts, inheritance, and income earned abroad.