Africa's Money in Africa

Osabuohien, E.S. and Efobi, U. (2013), "AFRICA’S MONEY IN AFRICA", South African Journal of Economics, Vol 81 (2), 292-306

Posted: 8 Jan 2014

Date Written: 2013

Abstract

Workers’ remittance and compensation of employees received in Sub-Sahara Africa (SSA) increased from USD 1.398 billion in 1980 to USD 4.834 billion in 2000 and soared to USD 21.101 billion in 2010. The impact of remittance on recipient economy requires further empirical investigation as there has not been consensus on whether remittance induces "financial prodigality" or investment in Africa. Differing from extant studies, this study employed rule of law, regulatory quality and government effectiveness as indicators of institutional quality. This is with a view to exploring how institutional quality and financial depth interact with remittance to influence investment in 44 African countries (1995-2010). The major finding from the study, inter alia, is that institutional quality and financial depth play complimentary role in influencing remittance for investment in Africa. This study concludes that the impact of Africa’s money in Africa will be enhanced in the presence of reliable institutional quality and viable financial sector. Thus, the side effect of "financial prodigality" that might be associated with remittance can be ameliorated.

Keywords: Diasporas, financial depth, institutional quality, investment, GMM, remittance

JEL Classification: E22, F24, F33, O16

Suggested Citation

Osabuohien, Evans S. C. and Efobi, Uchenna, Africa's Money in Africa (2013). Osabuohien, E.S. and Efobi, U. (2013), "AFRICA’S MONEY IN AFRICA", South African Journal of Economics, Vol 81 (2), 292-306, Available at SSRN: https://ssrn.com/abstract=2375665

Evans S. C. Osabuohien

Covenant University ( email )

P.M.B. 1023
Km 10 Idiroko road
Ota, Ogun State 234
Nigeria

Uchenna Efobi (Contact Author)

Covenant University ( email )

P.M.B. 1023
Km 10 Idiroko road
Ota, Ogun State 234
Nigeria
+48036273494 (Phone)

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