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Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa

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  • Sanjeev Gupta
  • Catherine A Pattillo
  • Smita Wagh

Abstract

This paper assesses the impact of the steadily growing remittance flows to sub-Saharan Africa (SSA). Though the region receives only a small portion of the total recorded remittances to developing countries, and the volume of aid flows to SSA swamps remittances, this paper finds that remittances, which are a stable, private transfer, have a direct poverty mitigating effect, and promote financial development. These findings hold even after factoring in the reverse causality between remittances, poverty and financial development. The paper posits that formalizing such flows can serve as an effective access point for "unbanked" individuals and households, and that the effective use of such flows can mitigate the costs of skilled out-migration in SSA.

Suggested Citation

  • Sanjeev Gupta & Catherine A Pattillo & Smita Wagh, 2007. "Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa," IMF Working Papers 07/38, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:07/38
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    Cited by:

    1. Ebenezer A. Olubiyi & Kubrat O. Kehinde, 2015. "Does Exchange Rate Affect Remittances in Nigeria?," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 7(1), pages 031-045, June.
    2. Jawad, Muhammad & Qayyum, Abdul, 2015. "Modelling the Impact of Policy Environment on Inflows of Worker’s Remittances in Pakistan: A Multivariate Analysis," MPRA Paper 85497, University Library of Munich, Germany.
    3. Albert Bollard & David McKenzie & Melanie Morten, 2009. "The Remitting Patterns of African Migrants in the OECD," CReAM Discussion Paper Series 0921, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    4. Rukmani Gounder, 2014. "Does Remittances Finance Welfare Development?: Evidence from the South Pacific Island Nation of Fiji," Proceedings of Economics and Finance Conferences 0401213, International Institute of Social and Economic Sciences.
    5. Emmanuel Owusu-Sekyere & Reneé van Eyden & Francis M Kemegue, 2014. "Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach," Contemporary Economics, University of Finance and Management in Warsaw, vol. 8(3), September.
    6. International Monetary Fund, 2008. "Can Regional Cross-listings Accelerate Stock Market Development? Empirical Evidence from Sub-Saharan Africa," IMF Working Papers 08/281, International Monetary Fund.
    7. Nyamongo, Esman Morekwa & Misati, Roseline N. & Kipyegon, Leonard & Ndirangu, Lydia, 2012. "Remittances, financial development and economic growth in Africa," Journal of Economics and Business, Elsevier, vol. 64(3), pages 240-260.
    8. Andreas Billmeier & Isabella Massa, 2007. "What Drives Stock Market Development in the Middle East and Central Asia—Institutions, Remittances, or Natural Resources?," IMF Working Papers 07/157, International Monetary Fund.
    9. Chandan Sapkota, 2013. "Remittances in Nepal: Boon or Bane?," Journal of Development Studies, Taylor & Francis Journals, vol. 49(10), pages 1316-1331, October.
    10. Ritha Sukadi Mata, 2009. "Microfinance Institutions (MFIs) on the Remittances Market: Money Transfer Activity and Savings Mobilisation," Working Papers CEB 09-022.RS, ULB -- Universite Libre de Bruxelles.
    11. Andrew Burns & Sanket Mohapatra, 2008. "International Migration and Technological Progress," World Bank Other Operational Studies 11021, The World Bank.
    12. Yaw Nyarko & Kwabena Gyimah-Brempon, 2011. "Social Safety Nets: The Role of Education, Remittances and Migration," RSCAS Working Papers 2011/26, European University Institute.
    13. Lim, Sokchea & Morshed, A.K.M. Mahbub, 2015. "International migration, migrant stock, and remittances: Reexamining the motivations to remit," The Quarterly Review of Economics and Finance, Elsevier, vol. 57(C), pages 101-115.
    14. Francis M. Kemegue & Emmanuel Owusu-Sekyere & Reneé van Eyden, 2011. "What drives remittance inflows to Sub-Saharan Africa: A Dynamic Panel Approach," Working Papers 262, Economic Research Southern Africa.
    15. Mihasonirina Andrianaivo & Charles Amo Yartey, 2009. "Understanding the Growth of African Financial Markets," IMF Working Papers 09/182, International Monetary Fund.
    16. Rémi Generoso, 2012. "Transferts de fonds et résilience des pays d'Afrique de l'Ouest face à la variabilité des précipitations : une perspective macroéconomique," Working Papers hal-00830021, HAL.
    17. Rocher, E. & Pelletier, A., 2008. "Migrant workers’ remittances: what is the impact on the economic and financial development of Sub-Saharan African countries?," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 13, pages 103-120, Autumn.
    18. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
    19. Billmeier, Andreas & Massa, Isabella, 2009. "What drives stock market development in emerging markets--institutions, remittances, or natural resources?," Emerging Markets Review, Elsevier, vol. 10(1), pages 23-35, March.

    More about this item

    Keywords

    Development; Financial sector; Poverty reduction; Sub-Saharan Africa; Workers remittances; remittances; migration; migrant; remittance; international migration;

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