How Ghanaians abroad are building the national economy with remittances

RemittancesRemittances from Ghanaians living abroad have become a very important component of Ghana’s economy.

By sending money home to relatives to cater for the sick, pay for education, acquire landed property and feed households, Ghanaians living abroad are building and sustaining the country’s economy.

The importance of remittances from Ghanaians abroad can be seen in the fact that it has outstripped even Overseas Development Assistance (ODA) or international aid.

Notwithstanding the fact that international aid is an important source of external finance for the government budget, the amount remitted into the country is above the total amount of  ODA, consisting of loans and grants from donors.

Many of Ghana’s donors having realised that all non-income Millennium Development Goals (MDGs) are likely to be missed, scaled-up their ODA to Ghana in recent years. ODA now accounts for about 42% of the national budget.

In 2009, the Bank of Ghana reports show that remittance inflows amounted to $1.6 billion, higher than the World Bank’s recorded $1.5 billion and almost 10 times the $114 million recorded by the International Monetary Fund (IMF).

There are over 500,000 Ghanaians living in the UK alone, the British High Commission in Accra has said,  and according to the World Bank, there are 111,000 Ghanaians living in the US, making Ghana the fourth country with the highest number of its citizens living in the US after Nigeria, 211,000, Ethiopia, 140,000 and Egypt, 133,000. About 1000 Ghanaian doctors are living and working in the US.

There are Ghanaians living and working almost in every corner of the world in various capacities who send money home to their relatives.

In 2010, remittances or private unrequited transfers (net) in the year amounted to $2.12 billion, the World Bank Ghana Country office told And that amount exceeds the total volume of ODA that the country received in that year.

According to figures provided to by the Public Relations Office of the Ministry of Finance and Economic Planning, in 2010 the total amount of ODA the country received was $1.8 billion.

The breakdown as provided by the Ministry is as follows: Grants – $612 million; and Loans  – $1,242 billion.

Remittance receipts in general, according to a joint publication by the World Bank (WB) and the African Development Bank (AfDB) titled, ‘Leveraging Migration for Africa’, generate large benefits for emigrants’ countries of origin.

“At the macro level, remittances tend to be more stable than other sources of foreign exchange; their variation is often countercyclical, helping sustain consumption and investment during downturns; and they improve sovereign creditworthiness, by increasing the level and stability of foreign exchange receipts,” it says.

At the micro level, it adds, both country studies and cross-country analyses have shown that remittances reduce poverty. They also spur spending on health and education, as a result of both higher household incomes and—according to some studies—the devotion of a larger share of remittances than other income sources to these services.

In addition, the study indicates that remittances provide insurance against adverse shocks by diversifying the sources of household income. For example, a recent study finds that Ethiopian households that receive international remittances are less likely than other households to sell their productive assets, such as livestock, to cope with food shortages.

According to the Migrations Factbook 2011, published by the World Bank, the stock of Ghanaian emigrants in 2010 was 824,900 and the stock of emigrants as percentage of population was 3.4%.

And it listed the following countries as top destinations for Ghanaians; Nigeria, Cote d’Ivoire, the US, UK, Burkina Faso, Italy, Togo, Germany, Canada and Liberia.

On skilled emigration for 2000, the Factbook states that the emigration rate of tertiary-educated Ghanaians was 46.9% of the population, 924 or 37.1% of physicians trained in the country, 1,639 or 55.9% of physicians born in the country. The number of nurses that left the country was 4,766 or 24.1% of nurses born in the country.

The WB, AfDB study says many migrants transfer funds to households in origin countries for the purpose of investment. “Data from household surveys reveal that households receiving international remittances from OECD countries have been making productive investments in land purchases, building houses, businesses, improving the farm, agricultural equipment and other investments (36 percent in Burkina Faso, 55 percent in Kenya, 57 percent in Nigeria, 15 percent in Senegal, and 20 percent in Uganda; figure 4.3). Households receiving transfers from other African migrants in other African countries set up small-scale businesses, such as restaurants and beauty salons. They also invest in housing.”

The study also shows that the African diaspora has invested in service sector activities, such as import/export companies, telecommunications, and tourism and transport companies (examples include Databank, in Ghana; Geometric Power Limited, in Nigeria; Teylium, in Senegal; and Celtel, in Sudan).

It cited the results of a survey of 302 returnees conducted in 2001 which indicates that more than half of Ghanaian and 23 percent of Ivorian returnees reported returning with more than $5,000 in savings (Black and Castaldo 2007). Both studies indicate that many return migrants invest in business activity and that work experience and the maintenance of communication with friends and family while abroad facilitates the opening a business upon return.

Cassini (2005) concludes, according to the study, that the most successful Ghana-based businesses of Ghanaian migrants were owned by migrants who visited home frequently and developed social networks.

By Emmanuel K. Dogbevi

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