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

Author/Editor:

Sanjeev Gupta ; Catherine A Pattillo ; Smita Wagh

Publication Date:

February 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2007/038

Subject:

Banking Financial sector development Migration Poverty Remittances

English

Publication Date:

February 1, 2007

ISBN/ISSN:

9781451866025/1018-5941

Stock No:

WPIEA2007038

Pages:

43

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