Thesis (MDF)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: Immigrant remittances have received increasing attention over the last couple of decades, due to the substantial financial inflows into developing countries, as their size and impact on the economies have experienced significant growth over a period of time. This study has investigated the relationship between financial development, specifically for the banking sector, and remittances for eight Sub-Saharan African (SSA) countries by utilising panel estimation techniques from 1993-2011. In this particular study, the investigation was focused on the association between remittances and the aggregate level of bank deposits (M2) and domestic credit to the private sector that represented financial development. For M2, the results showed that remittances are negatively correlated with money supply and it was not statistically significant for this equation. However, in terms of domestic credit to the private sector, a positive and significant determinant was found for remittances and financial development in these eight Sub-Saharan countries. It is recommended that policymakers should develop and implement sustainable policies to facilitate uninterrupted flow of remittances, strengthen financial institutions and sound macro-economic policies in order to attract more remittances through the banking sector.

Thesis (PhD)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: This study analyses the implications of financial liberalisation programme for international remittance inflows with regard to the macroeconomic determinants and also the implications of remittances for economic growth and development in sub-Saharan Africa (SSA) between 1980 and 2009. The methodological approach to the analytical framework of this study is based on the hypothesis that financial liberalisation causes higher inflows of international migrant remittances through official channels to augment the scarce domestic financial resources, and to stimulate economic growth for sustainable development in capital-constrained SSA. Prior to the macroeconometric analyses, the study addressed definitional and measurement issues on international remittances and financial liberalisation, and provided an overview of the macroeconomic policy environment in post-independent SSA, as well as the magnitude and the trends in remittances received by SSA relative to other developing economies. First, the system Generalised Method of Moment (GMM) for dynamic panel-data estimation was used to determine the macroeconomic factors responsible for the changing trends in remittance inflows. Then an inquiry into the impact and causal effects of financial liberalisation on international remittance inflows in SSA following the static panel-data modelling and panel Granger non-causality estimation procedures was undertaken. Following this, the system GMM was further employed to examine the impact of remittances on long-run economic growth, and the effects of remittance inflows on economic development in SSA. Essentially, the economic development indicators considered in this study are poverty, income inequality, labour market outcomes, human capital development, and financial development. It is revealed in this study that the most appropriate measure of international migrant remittances is the sum of “workers‟ remittances” and “compensation of employees” excluding “migrant transfers”. Using remittances per capita, which the study found to be the best proxy for remittances per migrant rather than the commonly used remittances as a percentage of GDP, it is shown that SSA is the least recipient of official migrant remittances in the world, with no SSA country receiving remittances worth US$1 per day. This study further establishes that the macroeconomic factors that influence remittance inflows in SSA have varying rather than static impact in response to changing macroeconomic policy environment. Also, macroeconomic factors have different influences on attracting remittances from abroad in relation to migrant duration status – permanent or temporary. Although financial liberalisation Granger-causes international remittances, not sufficient evidence exists that a significant proportion of the official remittances received in SSA passes through the banking system. Besides, the extent to which financial liberalisation can Granger-cause and/or positively impact on international remittance inflows in SSA is directly and ultimately conditional to the macroeconomic fundamentals of the remittance-receiving SSA country. It was also found out that generally, international migrant remittances propel higher economic growth in SSA, with greater impact on SSA countries with relatively higher growth rates. International remittance inflows have significant positive developmental impact, with no sufficient evidence of moral hazard effects. Overall, international remittances contribute to reducing poverty and unemployment but not necessarily income inequality and, at worse, remittances have no significant impact on labour productivity and participation in SSA. Higher remittance inflows promote human welfare, educational attainment, life expectancy, and financial development in SSA. With the exception of educational attainment, the developmental effects of remittances vary across countries, depending upon the level of economic development.

The study investigated the impact of remittances on financial development in Africa using the dynamic generalised methods of moments (GMM) and other panel data analysis methods with data from 2003 to 2015. Using the same econometric estimation methods, the study also explored the influence of the complementarity between remittances and economic growth on financial development in Africa. Literature on the relationship between remittances and financial development is mixed, inconclusive and indecisive. The desire to contribute towards literature on the influence of remittances on financial development in the African context prompted this study. In Africa, personal remittances had an insignificant positive impact on financial development across all the econometric estimation approaches in all the four models, in line with some empirical studies on the subject matter. African countries are urged therefore to avoid wasting their time developing and implementing remittances, foreign aid and human capital development enhancement policies as a way of spearheading financial development. Using both broad money (as % of GDP) and domestic private credit ratio as measures of financial development, the interaction between remittances and economic growth was found to have a non-significant negative effect on financial development in Africa. The policy implication is that Africa needs to avoid over relying on economic growth as a channel through which financial development can happen / Die studie het die impak van betalings op finansiële ontwikkeling in Afrika ondersoek – deur middel van die dinamiese veralgemeende momentemetode (GMM) en ander metodes van paneeldata-ontleding, met data van 2003 tot 2015. Dieselfde ekonometriese beramingsmetodes is ook ingespan om die invloed van die komplementariteite tussen betalings en ekonomiese groei op finansiële ontwikkeling in Afrika te ondersoek. Die literatuur oor die verwantskap tussen betalings en finansiële ontwikkeling is gemeng, onoortuigend en vaag. Die begeerte om tot die literatuur oor die invloed van betalings op finansiële ontwikkeling in die Afrika-konteks by te dra, het tot hierdie studie aanleiding gegee. In Afrika het persoonlike betalings ʼn onbeduidende positiewe impak op finansiële ontwikkeling in al die benaderings tot ekonometriese beraming in al vier modelle gehad, wat strook met sommige empiriese studies oor die onderwerp. Afrika-lande word dus gemaan om nie hul tyd te mors met die ontwikkeling en implementering van betalings en buitelandse hulp en beleide om mensekapitaalontwikkeling te verbeter as ʼn manier om finansiële ontwikkeling te lei nie. Daar is bevind dat sowel breë geldvoorraad (as ʼn persentasie van BBP) en die binnelandse private kredietverhouding as maatstawwe van finansiële ontwikkeling, die wisselwerking tussen betalings, en ekonomiese groei ʼn nie-beduidende negatiewe uitwerking op finansiële ontwikkeling in Afrika het. Die beleidsimplikasie is dat Afrika moet waak teen oorafhanklikheid van ekonomiese groei as ʼn kanaal waardeur finansiële ontwikkeling kan plaasvind. / Ucwaningo beluphenya umthelela wezimali ezibhadalwayo mayelana nokuthuthukiswa komkhakha wezezimali e-Afrika ngokusebenzisa izindlela ezifanayo zezikhathi (GMM) kanye nezinye izindlela zokuhlaziywa idatha yephaneli ngokusebenzisa idatha yonyaka ka 2003 ukufikela ku 2015. Ngokusebenzisa izindlela ezifanayo zohlelo lokulinganisa isimo somnotho (econometric estimation), ucwaningo futhi luye lwahlola umthelela wousebenzisana okuphakathi kwezimali ezibhadalwayo kanye nokuhluma komnotho mayelana nokuthuthukiswa ngezimali e-Afrika. Umbhalo wobuciko mayelana nobudlelwano phakathi kwezimali ezibhadalwayo kanye nokuthuthukiswa kwezinhlaka zezimali uxutshwe ndawonye, awunaso isiphetho futhi awukwazi ukuthatha izinqumo. Isidingo sokufaka igalelo embhalweni wobuciko mayelana nomthelela wezimali ezibhadalwayo kwihlelo lokuthuthukiswa kwezimali ngaphansi kwesizinda sase-Afrika, ykho okuphembelele ukuthi kube nalolu cwaningo. E-Afrika, izimali ezibhadalwa abantu ziye zaba nomthelela omuhle kwintuthuko yezimali kuzo zonke izindlela zokulinganisa izinga lentuthuko yezomnotho kuwo wonke amamodeli amane, ngokuhambisana nezinye izifundo zocwaningo oluphathekayo lwalesi sifundo. Ngalokho-ke amazwe ase-Afrika ayanxenxwa ukuthi agweme ukumosha isikhathi sawo athuthukisana futhi asebenzisa uhlelo lokuthumela izimali futhi agweme ukuqinisa imigomo yoncedo oluvela emazweni angaphandle kanye nokuthuthukisa abantu ngokwamakhono omsebenzi, njengento yokuhlahla indlela yohlelo lokuthuthukiswa kwezimali. Ukusethenziswa kokubili imali ebanzi (njengephesenti le-GDP) kanye njengesilinganiso sesikweletu, phecelezi-domestic private credit ratio sisebenza njengesilinganiso sezinga lokutthuthuka ngokwezimali, ukusebenzisana phakathi kwezimali ezibhadalwayo kanye nokuhluma komnotho kutholakele ukuthi kube nomthelela ongabalulekile omubi phezu kwezinga lentuthuko yezimali e-Afrika. Ngokomgomo lokhu kuchaza ukuthi i-Afrika idinga ukuthi igweme ukwencika kakhulu ukusebenzisa uhlelo lokuthuthukiswa komnotho njengomgudu lapho kungathuthukiswa komnotho. / Financial Accounting / M. Com. (Business Management)