Growth effects of migrants’ remittances in selected Sub-Saharan African countries

Abstract

The study examined the assumption that ‘size matters’ in the empirical controversy of the relationship between migrants’ remittances and economic growth. This is done through an empirical analysis of the remittances-growth relationships in selected countries in Sub-Saharan Africa, where remittance inflows are overwhelming proportions of real GDP. The study used data at the country level, for five countries: Cape Verde, Lesotho, Nigeria, Senegal and Togo. The long-run ARDL estimates indicate positive and significant effects of migrants’ remittances on growth performance in Cape Verde and Nigeria, but negative, and slightly significant effects for Lesotho, with no evidence of long-run level relationships between remittances and economic growth in Senegal and Togo. Thus, the assumption that size may matter in the remittance–growth nexus finds no support, as findings provide no significant departure from the existing inconclusiveness of empirical literature on the relationship. For policy, the study advocates country-level policies that improve the efficiency of remittance inflows and promote the use of remittances for developmental purposes.