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

45 Pages Posted: 4 Mar 2007

See all articles by Smita Wagh

Smita Wagh

International Monetary Fund (IMF)

Catherine A. Pattillo

International Monetary Fund (IMF) - Research Division

Date Written: February 2007

Abstract

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.

Keywords: Workers remittances, Sub-Saharan Africa, Poverty reduction, Financial sector, Development

Suggested Citation

Wagh, Smita and Pattillo, Catherine, Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa (February 2007). IMF Working Papers, Vol. , pp. 1-43, 2007. Available at SSRN: https://ssrn.com/abstract=967879

Smita Wagh (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Catherine Pattillo

International Monetary Fund (IMF) - Research Division ( email )

700 19th Street NW
Washington, DC 20431
United States

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