Migration, Remittances and Resilience in Africa

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  • 2012•09•19

    Wim Naudé

    Migrant laborers flee Libya

    UN Photo/A.Duclos

    The monetary value of remittances from migrants to Africa now exceeds that of aid. Wim Naudé of the UNU Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT) and Maastricht School of Management examines the importance of these payments for African countries and discusses whether they can provide resilience on a continent that has been disaster and conflict prone.

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    In sub-Saharan Africa, migration — including international migration, internal migration and displacement — remains at the top of the policy agenda.

    One reason for this is that African countries have lost a substantial proportion of their skilled labour force through emigration (the “brain drain”), which is generally seen as being caused by a lack of economic opportunities and conflict. African countries also have generally failed to attract more highly skilled immigrants: in 1960, for instance, there were proportionately more immigrants in Africa than in Europe, but by 2000 this trend had reversed by a substantial margin.

    The migration issue is also a priority because remittances from migrants (the transfer of money by foreign workers to their home countries) are recognized as having been an important source of resilience for households in African countries, especially in light of the fact that the monetary value of remittances to Africa now exceeds that of aid.

    Changes in Net Migration, 2000 - 2005

    Changes in Net Migration, 2000 - 2005

    Despite this, and in spite of many analyses of the patterns and extent of migration from and to African countries, there remains much that is not known about African migration. Specifically lacking are quantifications of the determinants of international migration from Africa to evaluate the relative importance of conflict, economic factors or environmental changes. Also missing are evaluations of the extent to which remittances contribute to resiliency in the face of external and internal shocks.

    In two recent papers, inspired by a better understanding of vulnerability and fragility in Africa derived from a larger UNU-WIDER project on Fragility and Development, I investigated these two issues in greater depth (see also “Further reading” at the bottom of this page).

    First, using data on net migration for 45 African countries for 10 five-year periods, from 1960 to 2005 (made available by the UN Population Division), and employing a dynamic panel data estimator, I found that, in broad terms, armed conflict and differences in GDP growth have the greatest impact on international migration from Africa. An additional period of conflict will raise emigration by 1.7 per 1,000 inhabitants, while 1% GDP growth will reduce emigration by 1.5 per 1,000.

    Hence, international migration from Africa is largely forced in nature.

    The role of natural hazards and more gradual environmental degradation and pressure on natural resources are more difficult to discern, despite the claim by many that environmentally forced migration is significant in Africa. There is, in fact, in terms of the statistical analyses, no direct evidence that environmentally forced migration is significant on the macro-level. Tentative evidence, however, suggests that natural disasters may act as a trigger for conflict in Africa, so that environmental factors may indirectly drive international migration. Further research is needed in this regard.

    Second, given the determinants of international migration, and given that the rate of migration from Africa has been increasing dramatically in recent years (Africa is the region with the second-largest population of international migrants and the region with the highest growth rate in net migration, exceeding 275 percent between 2000 and 2005), the question is whether this rising rate of migration is of value to African countries. Can remittances from migrants provide resilience on a continent that has been disaster- and conflict-prone?

    The answer seems to be: yes.

    Using data on remittances and the occurrence of natural and financial disasters and conflicts from 23 sub-Saharan African countries over the period 1980–2007, and taking into account unobserved country heterogeneity and potential endogeneity problems, we found the following:

    First, the outbreak of conflict or a global financial crisis does not have a statistically significant impact on remittances to African countries over the short-term. In other words, remittances do not rise (nor decline) significantly after such human-made disasters.

    Second, and in contrast, remittances to Africa do seem to increase significantly after a natural disaster — even if these disasters are most often slow-onset disasters, such as drought.

    Third, an African country’s gross national income per capita is an important determinant of the volume of remittances it receives (poorer countries tend to receive more remittances than richer countries). In particular, we found that remittances are counter-cyclical, meaning that remittances are indeed a source of general economic resilience.

    This is supported by the finding that remittances to African countries tend to be much more stable than other financial flows, including aid, especially over the short-term. This stresses the importance of African migrants as a source of financial inflows. There is, furthermore, no evidence in the macro-data that greater aid to Africa will displace remittances.

    The positive impact of remittances to African countries can be improved through development of a sending-country’s financial system and through better employment security of migrants in their host countries. The danger, however, is that crises of longer duration will lead to reductions in migrant employment in host countries (especially Europe and other African countries) and will also repress the development of African countries’ banking sectors. The continuing economic malaise in Europe and the failure to reduce uncertainty in the global financial sector, therefore, is eventually likely to impact negatively on remittances to Africa.

    Further reading

    Naudé, W.A. (2010), “The Determinants of Migration from Sub-Saharan African Countries“, Journal of African Economies, 19 (3): 330-356.

    Naudé, W.A. and H. Bezuidenhout (2012), “Remittances Provide Resilience Against Disasters in Africa“, UNU-MERIT Working Paper, No. 2012-026, United Nations University.