Empowering Entrepreneurship: How Remittances Drive New Business Creation and in Africa's Top Recipient Nations

Mduduzi Biyase (), Zamokuhle Ndaba () and Sandile Mbatha ()

International Journal of Applied Economics, Finance and Accounting, 2025, vol. 22, issue 1, 1-17

Abstract: This study aims to investigate the relationship between remittances and new business creation in the top remittance-receiving countries in Africa (Nigeria, Ghana, Senegal, and Mali). To investigate the relationship between remittances and new business creation in the top remittance-receiving countries between 2006 and 2021, the study first applied the Autoregressive Distributed Lag (ARDL) model in a stepwise manner, followed by the use of the Panel Fully Modified Least Squares (FMOLS) method. The study's findings indicate that increased remittances lead to the creation of more new businesses, as evidenced by the statistically significant positive coefficient of remittances across all models. Control variables such as Gross Domestic Product (GDP) and institutional quality are statistically significant with positive coefficients, highlighting that economic growth and high-quality institutions promote new business creation. On the other hand, economic globalization has a negative coefficient and is statistically significant, indicating that economic globalization prohibits local business creation. The study concludes that increased remittances promote new business creation in top remittance-receiving African countries. These results present an opportunity for the government and policymakers to enact policies that promote the inflow of remittances and create a conducive environment for new business creation and entrepreneurial activities to flourish.

Keywords: Africa; ARDL; Entrepreneurship; Remittances. (search for similar items in EconPapers)
Date: 2025
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