African Migrants and Remittances: Impact on Growth and Development of their Home Countries

Abstract

This paper aims to study the impact of remittances from African migrants on their home countries’ growth and development. These funds constitute a steadily increasing financing means in all these countries, even though development aid is still the preferred financing method. To highlight the role of these funds, we relied on a number of experiences as far as their targets and uses are concerned. Globally speaking, stylized facts based on case studies show that remittances have a positive impact on migrants’ home countries’ economies. In particular, they reduce household poverty and thereby increase their well-being. In addition, they stimulate local economic activity and growth. Given the role and stability of these funds, cost reduction is essential to encourage migrants to send more money through official transfer channels. It is also necessary to increase the managerial efficiency of these funds by orienting them towards implementing profitable projects, rather than devoting them entirely to household consumption. Lastly, it is necessary to encourage the capture of related financial flows by the traditional banking system and microfinance institutions.