REMITTANCES AND FINANCIAL DEVELOPMENT IN SUB-SAHARAN AFRICAN COUNTRIES

Abstract

The influence of remittances on Sub-Saharan Africa's financial growth has drawn scholars' attention as a result of the dramatic rise in international remittances to less developed countries over the last 10 years, particularly Sub-Saharan Africa. Considering this, the study evaluated how remittances have affected financial sector development in Sub-Saharan Africa regional. The research used 32 Sub-Saharan African nations between the years 2000 and 2018 to test the dual gap model's claim that emerging economies may leverage foreign investment to close the investment-saving gap. The Arellano and Bond and Blundell and Bond dynamic GMM estimator was used to address the objective of the study due to the small sample size necessitated by the lack of data availability for several years. The study found that an increase in the influx of international remittances is the driving force for an increase in the level of financial development in the region. It is therefore recommended, among other things, that efforts be made to encourage Sub-Saharan Africans in the diaspora to remit funds to the region. Additionally, the financial services provided by financial institutions in the region should be enhanced, and the financial instruments and payment systems should be enhanced to facilitate the transmission of funds from abroad.