Remittances, the financial flows resulting from emigration, have become one of the most significant sources of foreign exchange for developing nations.
These inflows, sent by migrants to their families in their home countries, often surpass traditional sources of external financing such as foreign direct investment (FDI).
International remittances provide households in most developing countries with significant and sometimes critical lifeline income that helps to improve their general livelihoods and alleviate the incidence of poverty.
Remittances provide critical foreign exchange earnings, helping to stabilize national economies and mitigate the effects of economic shocks.
In some developing economies, remittances make up a considerable portion of the gross domestic product (GDP), in some cases exceeding 10%. Ghana is a net-receive country where personal remittances received as a share of GDP has grown from 5.2% in 2019 to 6.4% in 2023.
There are many reasons why migrants remit money home. These range from a combination of economic, social and emotional factors including self-interest motives and some level of implicit contract sometimes underlying these.
The grass, as they say, is greener on the other side, so the expectation is that family members who have had the opportunity to experience the “other side” will fulfil their end of this implicit contract by remitting funds back home.
For migrants, the need to support family and dependants with support for food, housing, education and healthcare is a key reason.