Quarterly

The Impact of Migrant Remittances on Household Welfare in Ghana

By

Peter Quartey 1

FINAL REPORT SUBMITTED TO THE AFRICAN ECONOMIC RESEARCH CONSORTIUM (AERC), NAIROBI, KENYA February 2006

1

Research Fellow, Institute of Statistics, Social and Economic Research, University of Ghana I wish to express my profound gratitude to Prof. Ernest Aryeetey (ISSER), Dr. Nii Kwaku Sowa (CEPA), Dr. Samuel Maimbo (World Bank), Donatus Ayitey (ISSER), Benardin Senadza (Univ. of Ghana) and Mr. John Kotoku (Bank of Ghana) for their invaluable support. I am most grateful to the AERC for supporting this study. Finally, I thank all those who have provided input into this paper.

The Impact of Migrant Remittances on Household Welfare in Ghana

By

Peter Quartey

Abstract: Migrant worker remittances have been the backbone of many Ghanaians, particularly in times of economic shocks. The importance of migrant worker remittances in Ghana is evidenced by the proliferation of money transfer institutions in Ghana (both formal and informal) and the rapid increases in migrant remittances to Ghana. It has been argued that migrant remittances are becoming a potential source of external finance and its magnitude exceeds the amount of ODA in some developing countries. Balance of payments statistics from Bank of Ghana indicate the amount of remittances to Ghana exceeds ODA and it is a potential force to reckon with particularly considering its growth rate in recent years. It is general knowledge in Ghana that families with migrant workers; particularly those in developed countries are able to withstand shocks to income. However, this relationship has not been tested empirically in Ghana despite the fact that the Ghana Living Standards Survey is rich with such micro-data on the economy. This study therefore uses Waves I to IV of the GLSS to investigate whether migrant remittances significantly affect household poverty (welfare). The study found that remittances improve household...