External Migrant Remittances and Household Expenditure Patterns in Ghana

Abstract

Migrant remittances have gained recognition as an alternative source of development finance in recipient countries because of the positive welfare implications of such transfers at the household, community and national levels at large. The study analyzed the relationship between external migrant remittances and household expenditure patterns in Ghana. The study used data from the Ghana Living Standard Survey data (GLSS 5). Data were analyzed for descriptive statistics as well as a Tobit Regression Model for the relationship between external migrant remittances and household expenditure patterns in Ghana. The study results have shown that households who received external remittances decrease their budget shares on consumption aI nd some investment goods but increase their budget share on particularly housing than households without remittance income. The study also lends to the view that remittances cannot support to build the level of human capital and entrepreneurial investment in remittance –receiving nations; and point to the non-productive use of remittances in Ghana. To achieve economic growth and development with remittance income some actions should be taken. This would be possible within an enhanced government policy framework with the active participation of the financial sector in the country. This study recommends suitable policies such as reduction in leakages in transfers through informal channels, reducing cost of transfers, enabling the financial sector to innovate profitable instruments to attract remittances into savings and to boost financial deepening, and above all creating a sound macro-economic environment by Government.