Political instability and migrants’ remittances into sub-Saharan Africa region

Abstract

This study uncovers the causal relationship between political instability (constructed using different indicators) and migrants’ remittances on a panel of 22 countries from sub-Saharan African region over the period 1994–2015. Using both the fixed effects and system of Generalised Method of Moments estimation techniques, the following empirical findings are established. First, the theoretical conjecture underpinning the belief in political instability as a factor driving migrants’ remittance inflows receives a clear empirical support. Second, regime instability is found to exert a significant positive impact on migrants’ remittances in the region. Third, remittance is also found to act as a shock-absorbing mechanism to macroeconomic fluctuations in times of political upheavals. Thus, it has been alleged as acting counter cyclically. Fourth, the impacts of other covariates (e.g. like income per head of home and host countries, interest rate differentials and foreign aid) are equally well supported. Last, the less politically volatile countries get more financial assistance from relatives living abroad than high politically volatile countries. On the basis of the foregoing, we suggest the need for government to identify and get to the root causes of the lingering political crises as remittance inflows and/or foreign aid supports cannot completely clear the damages orchestrated by political instability.