Migrant remittances and inclusive growth in Sub-Saharan Africa: Investment as the main transmission mechanism

Abstract

Migrant remittances constitute a major source of external financing in Sub Saharan Africa, yet the mechanisms through which they contribute to inclusive growth remain insufficiently established. This study examines their relationship with inclusive growth and identifies the main transmission channels. The analysis uses a balanced panel of 33 Sub Saharan African countries observed from 2000 to 2022, comprising 665 country year observations. Inclusive growth is measured using a composite index incorporating economic and social dimensions. The empirical strategy relies on multiple mediation analysis estimated through sequential regressions. The main equations are estimated by ordinary least squares with HC3 robust standard errors. Inference on indirect effects is based on 1,000 country clustered bootstrap replications and 95% percentile confidence intervals. The results show a positive and statistically significant association between remittances and inclusive growth (β = 0.252, p < 0.01). Among the mechanisms examined, only productive investment exhibits a significant indirect effect. Human capital, financial development, and tax revenue do not significantly transmit this relationship. These findings show that the contribution of remittances to inclusive growth depends on the channel through which these resources affect the economy. They therefore highlight the need for policies that encourage the allocation of remittance inflows toward productive investment to strengthen their contribution to more inclusive and sustainable development.

Classification JEL : F24; O15; O55; I32; C33; M41

Paper type : Empirical Research