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<p>Remittance inflows are a significant source of development finance, particularly in sub-Saharan Africa. By providing households with a relatively steady income, remittances help to stabilise consumption patterns and mitigate the impact of economic cycles. While these flows may reduce growth instability by alleviating domestic resource constraints, they could introduce new challenges, such as real exchange rate appreciation. Using a system-GMM estimation approach to address potential endogeneity biases, this study examines whether remittance inflows mitigate economic growth instability in 45 Sub-Saharan African countries between 1980 and 2023. The empirical results suggest that, within the scope of this model, remittance inflows are associated with lower growth instability. Consequently, policies that facilitate remittance flows could play a constructive role in mitigating the impact of macroeconomic shocks and complementing regional development strategies. However, these findings should be interpreted with caution in light of the study’s limitations, particularly the underestimation of flows via informal channels and the presence of unobserved country-specific heterogeneity.</p>

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Do remittance inflows reduce growth instability in Sub-Saharan Africa?

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2026年6月25日

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  • Relwendé Sawadogo,
  • Gervasio Semedo,
  • Drissa Sawadogo

摘要

Remittance inflows are a significant source of development finance, particularly in sub-Saharan Africa. By providing households with a relatively steady income, remittances help to stabilise consumption patterns and mitigate the impact of economic cycles. While these flows may reduce growth instability by alleviating domestic resource constraints, they could introduce new challenges, such as real exchange rate appreciation. Using a system-GMM estimation approach to address potential endogeneity biases, this study examines whether remittance inflows mitigate economic growth instability in 45 Sub-Saharan African countries between 1980 and 2023. The empirical results suggest that, within the scope of this model, remittance inflows are associated with lower growth instability. Consequently, policies that facilitate remittance flows could play a constructive role in mitigating the impact of macroeconomic shocks and complementing regional development strategies. However, these findings should be interpreted with caution in light of the study’s limitations, particularly the underestimation of flows via informal channels and the presence of unobserved country-specific heterogeneity.