MACROECONOMIC ENVIRONMENT AND REMITTANCES IN SSA: MAGNITUDES, TRENDS AND STYLISED FACTS

What is it about?

This paper examines the role of remittances (money sent home by migrants) in supporting the economies of Sub-Saharan Africa (SSA). While remittances are crucial worldwide, SSA faces unique challenges and opportunities regarding these funds. Remittances provide a reliable source of income for families, supporting their daily needs, education, and healthcare. They are also a potential driver of investment, contributing to overall economic growth. The authors analyze how remittances in SSA have evolved since the region's independence and the factors that influence these inflows. They find that remittances are positively linked to stable and growing economies, with better economic policies attracting more funds. In times of crisis, such as during economic downturns, remittances often increase as migrants send more to support their families. This trend highlights remittances as a buffer against economic instability, especially as SSA nations often lack robust social safety nets. Additionally, the study emphasizes that SSA is still highly dependent on foreign aid compared to other regions, which have increasingly relied on remittances and investments. By focusing on remittance-driven development, SSA countries could reduce their dependence on aid and build a more resilient economy. The findings suggest that policies supporting macroeconomic stability and financial system development can increase remittance flows, benefiting both families and broader economic growth in the region.

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Photo by rupixen on Unsplash

Photo by rupixen on Unsplash

Why is it important?

This publication is particularly unique and timely because it addresses the evolving role of remittances in Sub-Saharan Africa (SSA) at a time when traditional sources of external financing, like foreign aid, are becoming less predictable and more conditional. The study highlights SSA’s reliance on remittances as a stable and often counter-cyclical source of funding, filling crucial financial gaps that aid and foreign investment may leave, especially during times of global economic volatility. By exploring the relationship between remittances and macroeconomic stability, the authors provide evidence that can reshape policy around economic resilience, advocating for strategies that promote remittances as a sustainable resource for growth. Furthermore, this study is significant for its policy implications. It encourages SSA countries to create macroeconomic environments conducive to remittance inflows, such as stable inflation, financial accessibility, and efficient transfer mechanisms. This is especially timely as digital finance and mobile banking gain traction, making remittance transfers more accessible and affordable for migrant workers and their families. The paper’s insights can guide policymakers, economists, and development organizations in SSA to harness remittances effectively, not only as household support but as a catalyst for investment, poverty alleviation, and economic resilience across the region. By addressing these critical needs and opportunities, the publication stands to attract a diverse readership across academia, policy think tanks, and international development agencies, increasing its impact and citation potential.

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