Working Paper 188 - Remittances and their Macroeconomic Impact: Evidence from Africa

Mthuli Ncube () and Zuzana Brixiová Schwidrowski

Working Paper Series from African Development Bank

Abstract: This paper examines macroeconomic trends, drivers and impact of remittances in Africa. First, it documents the increasing share of remittances relative to other foreign capital flows to Africa, distribution of remittance inflows across countries, and some key properties. This is followed by some analysis of the macroeconomic drivers of remittances in recipient countries, such as the level of income, inflation and nominal exchange rate depreciation. Specifically, remittances are positively impacted by higher income, but deterred by an unstable macroeconomic environment, pointing to the investment motive in remitting to Africa. The paper also examines the role of remittances in funding Africa’s external balances. Finally, drawing on the case of Egypt, the paper shows the positive impact that rising remittances can have on public debt sustainability.

Date: 2013-12-23
New Economics Papers: this item is included in nep-ara and nep-mac
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