In the rush to digitize, Lagos is doing something commendable reaching for the diaspora. Its new online remote platform for engagement is a welcome shift from decades of bureaucratic opacity. But there’s an underlying question echoing beyond the announcement: can Nigerian states turn diaspora frustration into fiscal partnership? Lagos might be testing that hypothesis, but this challenge and opportunity belongs to every state in Nigeria.
The issue isn’t whether Nigerians abroad want to give back; they already do, massively. The issue is how their giving is structured and whether state governments have built the fiscal credibility to convert those gestures into measurable capital. To move forward, Nigeria must stop treating diaspora investment as charity and start structuring it as a transaction of trust.
The Lost Revenue of Distrust
Each year, Nigeria receives over $20 billion in diaspora remittances more than the annual oil revenues of several OPEC countries combined. This flow, mostly informal, has been described as “the invisible lifeline of the economy.” Yet less than 3% of it is channeled through formal investment or development programs.
What this means is simple: Nigerians abroad are already the country’s largest “foreign investors,” but the capital is sentimental, not strategic. It pays hospital bills, tuition, or supports family consumption but rarely scales into enterprise or infrastructure.
If even 10% of annual remittances were pooled through structured state frameworks, it could generate $2 billion annually, equivalent to nearly a quarter of Nigeria’s internally generated revenue (IGR) for 2024. But that requires trust and transparency has not been Nigeria’s strongest suit.
Most diaspora Nigerians distrust state governments’ fiscal behavior. They see opaque budgets, unexecuted projects, and political patronage masquerading as economic vision. For them, “taxation” feels less like contribution and more like exploitation. Lagos’ attempt to re-engage through digital platforms is a step forward—but the broader question remains: how do you tax what you haven’t yet earned the right to steward?
Counting the Untapped Billions
Let’s perform a simple thought experiment. Nigeria has 774 local governments. If each local government successfully attracted just $500,000 annually in structured diaspora investments whether through co-owned agricultural projects, urban tech clusters, or renewable energy cooperatives that would amount to $387 million per year. Over ten years, that’s nearly $4 billion, excluding compound growth and multiplier effects.
Now, scale that across state-level partnerships. Lagos, Ogun, and Enugu could easily attract $50–100 million annually if they had structured diaspora fiscal instruments like transparent municipal bonds, digital dashboards for project tracking, and joint public-private boards that include diaspora professionals.
Lagos’ smart city ambition, Ogun’s industrial expansion, and Anambra’s digital youth initiatives all share one constraint capital confidence. The diaspora could unlock that confidence, but the mechanism has to be co-ownership, not tax pressure.
In a post-COVID economy where traditional FDIs are shrinking and multilateral loans are tightening, diaspora-driven subnational finance could be Nigeria’s biggest growth engine. What foreign investors need to see in Nigeria, many diaspora Nigerians already know. The real question is whether states are prepared to make the diaspora a fiscal partner instead of a distant benefactor.
Beyond Taxes: The Economics of Trust
Economists often argue that money follows credibility. In governance, that credibility is measured not by how much a government demands but by how transparently it accounts for what it already has. Lagos may lead the pack in IGR, but the gap between collection and accountability still haunts its fiscal relationships.
Diaspora Nigerians don’t just want to donate; they want to own. That’s why the new conversation should not be about diaspora levies or special taxes but about trust economics a model where governments treat diaspora capital as a co-investment subject to returns, dividends, and measurable outcomes.
For example, a Diaspora Infrastructure Bond pegged at 7% annual yield could raise $500 million if just 50,000 diaspora Nigerians invested $10,000 each. If backed by a transparent dashboard showing real-time project spending and progress the model could be replicated across states.
This is not utopian. Ethiopia did it in 2010 with its Renaissance Dam Bond, mobilizing thousands of Ethiopians abroad. Israel’s diaspora bonds have raised over $40 billion since 1951. The key wasn’t emotional appeal it was trustable structure.
In Nigeria, that trust can only be rebuilt through digitized governance, participatory budgeting, and fiscal dashboards where every naira is traceable. Imagine a digital platform where diaspora investors can see, in real time, how funds for a solar energy project in Aba are being spent, with drone footage, receipts, and completion timelines. That is what the future of subnational credibility looks like.
Policy Reimagined: From Taxation to Co-Creation
If Lagos wants to be the model megacity of Africa, it must go beyond taxing businesses and start building fiscal partnerships. Other states should be watching closely.
Ogun State, for instance, could attract diaspora manufacturers into its industrial corridors by offering 5-year tax holidays and land co-ownership models for joint industrial parks.
Anambra, a state with one of the highest out-migration rates, could launch a Digital Igbo Investment Fund co-managed by diaspora entrepreneurs and state technocrats.
Enugu and Cross River, rich in tourism and hospitality potential, could offer tokenized land leases for diaspora investors to build eco-lodges or cultural centers ensuring traceable, blockchain-backed documentation to eliminate corruption.
Each of these models turns the narrative from taxation to co-creation. States that continue to view the diaspora merely as cash cows will lose their relevance in the coming decade. But those who co-create systems of fiscal transparency will attract not only diaspora capital but also global co-investors.
Here’s the economic logic: If 5000 skilled diaspora Nigerians each invest $10,000 annually across 36 states, that’s $1.8 billion per year. Over 10 years, factoring moderate returns, that could exceed $18 billion in cumulative investment. This is more sustainable than any donor program or World Bank loan because it’s driven by pride, profit, and partnership not pity.
But for this to happen, Nigerian states must upgrade their public finance architecture. Diaspora capital cannot sit on outdated systems that lack clarity or digital verification. It requires smart governance the kind that publishes quarterly dashboards, integrates blockchain for project tracking, and rewards performance with equity returns.
The Case for Fiscal Decentralization
Nigeria’s fiscal architecture has long been over-centralized. Federal allocations dictate state survival, stifling creativity. But the diaspora question introduces a new dynamic: what if states could independently raise diaspora bonds, issue project-based digital securities, or open subnational investment platforms registered abroad?
If well-regulated, this could deepen state autonomy and redefine fiscal federalism. Lagos, with its large professional diaspora community, can lead. But the goal should be replication every Nigerian state building an identity-based fiscal relationship with its diaspora.
Take Kano, for instance. With its merchant diaspora in the Middle East, it could establish Halal-certified industrial clusters co-funded by its diaspora investors. Ekiti, with its academic diaspora, could pioneer a Diaspora Knowledge Endowment Fund for education infrastructure. Bayelsa, with its offshore diaspora, could launch a green energy transition fund.
Each state’s diaspora is a mirror of its identity and therefore its capital potential. To convert that identity into investment, states must provide one thing the diaspora values most: predictability.
Building the Trust Dividend
The trust deficit remains the biggest fiscal leak in Nigeria’s governance. It’s the difference between diaspora charity and diaspora capital. Every Nigerian state that fails to digitize its fiscal processes is silently forfeiting billions in potential investment.
The “trust dividend” is measurable. Countries like Kenya and Ghana have seen their diaspora investment inflows rise after implementing digital fiscal transparency tools. Kenya’s M-Akiba bond, launched via mobile phones, attracted over 300,000 small diaspora investors within its first year.
Imagine a Nigerian equivalent call it NaijaBond where diaspora professionals can invest as little as $100 through verified digital wallets into certified state projects. That kind of fiscal inclusion would transform governance from a privilege into a partnership.
Trust is no longer a moral concept, it’s a measurable economic variable. States that invest in it will outperform those that don’t.
A National Call: Don’t Tax the Trust—Build It
Nigeria’s diaspora doesn’t need emotional appeals; they need credible invitations. Lagos has taken the first step by opening a digital door. But that door must lead somewhere concrete a clear pathway to shared prosperity.
Other states must not wait. Ogun, Anambra, Cross River, and Kaduna can each craft their own diaspora investment blueprints, leveraging digital governance, transparent accounting, and co-ownership mechanisms.
This is not about taxation. It’s about transformation. The difference between a state that taxes its diaspora and one that partners with them is the difference between a donor economy and a development economy.
The diaspora is already Nigeria’s biggest economic bloc—it just doesn’t see itself that way yet. What it needs is vision from home: leaders who recognize that every complaint from abroad is an untapped contract waiting to be rewritten in trust and numbers.
Call to Action
Every time a Nigerian abroad says, ‘I can’t invest because I don’t trust them,’ the economy loses a heartbeat. But trust isn’t born from speeches, it’s engineered through systems. Lagos has made the first move. The real question is will the diaspora match it? Because the next era of development isn’t funded by taxes, it’s powered by confidence.