Academic journal article Atlantic Economic Journal

Migrant Remittances Provide Resilience against Disasters in Africa

Academic journal article Atlantic Economic Journal

Migrant Remittances Provide Resilience against Disasters in Africa

Article excerpt


Disasters affect millions of sub-Saharan Africans every year. In 2012 no less than 30 % of global victims of disasters were in sub-Saharan Africa (SSA) (Guha-Sapir et al. 2013). SSA suffers from droughts more than any other region in the world (Centre for Research on the Epidemiology of Disasters [CRED] 2004). Drought is an important cause of slower economic growth. It has been estimated that drought can explain 36 % of the difference in average per capita GDP between SSA and other developing countries (Barrios et al. 2003). The region is also afflicted by disasters such as wars (Nillesen and Verwimp 2010). More than a third of all global armed conflicts between 1989 and 2012 were fought in Africa (Themner and Wallensteen 2013). Wars, or violent conflict, reduce consumption and production, and destroy infrastructure akin to natural disasters. Moreover, violent conflict vastly worsens the impact of droughts and floods (Bruck et al. 2013). Consisting mostly of small, open economies, SSA countries are vulnerable to external shocks, as many regional and global financial crises have illustrated (Naude 2010a; Naude and Bezuidenhout 2012:338).

Migrant remittances can potentially be a source of resilience in disaster-prone SSA. Remittances enable households to have diversified incomes, to build better and more robust dwellings, to keep their children in school, to have access to food and water, and even to start up new entrepreneurial firms (see Naude and Bezuidenhout 2012:338; Mohapatra et al. 2012). The question is, how responsive, if at all, are remittances to various disasters? How are remittances affected by global or systemic financial crises such as the 2008 global financial crisis, or the more recent Eurozone crises?

In this paper, we investigate these questions using data on 23 Sub-Saharan African (SSA) countries over the period 1980 to 2007. Apart from being disaster prone, SSA has experienced increasing rates of emigration (Naude 2010b). Concern is growing about the dangers that many of these migrants sustain in their attempts to migrate to the west, particularly Europe. (1) Moreover, SSA has been neglected in scholarly research on both migration (Naude 2010b) and remittances (Barajas et al. 2010). In this paper, we build and extend upon the earlier work of Naude and Bezuidenhout (2012) that focused on whether remittances are a source of resilience in the face of a globally synchronized financial shock. We extend the analysis to natural disasters and conflict.

The paper is structured as follows. In second section, we provide a review of the relevant literature on remittances and disasters, and we draw out some implications and hypotheses. Third section describes our methodology. Fourth section contains our regression results. Fifth section concludes.

Literature Survey: Remittances and Disasters

In this section we discuss the relationship between remittances and each of the three types of disasters identified in the introduction: natural disasters, conflict and global financial crises. However, we first discuss the measurement and determinants of remittances.

Measurement and Determinants

'Remittances' refer to financial transfers by migrants that go abroad (Chami et al. 2008). Most developing countries do not report on these components separately but rather on total remittances. Inadequate financial records, underdeveloped financial sectors, and "In kind" remittances have lead many to conclude that remittance data may be under-reported (Page and Plaza 2006).

The typical determinants of the size and growth of remittance flows include factors since as the characteristics of individual migrants and their sending households, and the features of host- and home-countries (see e.g. Freund and Spatafora 2008; Page and Plaza 2006; El-Sakka and McNabb 1999; Beck and Peria 2009; Singh et al. 2009; Farrant et al. 2006; Chami et al. …

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