Research Key

The impact of remittances on the economic growth of Cameroon

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International: $20
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 Background of  the Study

 Remittances are not a new phenomenon in the world, being a normal concomitant to migration which has always been a part of human history. Several European countries for example; Spain, Italy and Ireland were heavily dependent on remittances received from their emigrants during the 19th and 20th centuries World Bank (2019). In the case of Spain, remittances amounted to 21% of all its current account income in 1946. All of those countries created policies on remittances and they developed after significant research effort in the field. For instance, Italy was the first country to sign an international treaty with Argentina in 1960 to lower the cost of remittances received. For many developing countries, remittances from citizens working abroad provided an important source of needed funds and constitute the second largest financial inflow too many of these countries, exceeding international aid. Each year, billions of dollars are sent by migrant workers to their home countries, with some estimates putting the total value of remittances at more than 200 billion dollars. In fact, for some developing countries remittances make up a sizable portion of their gross domestic product (GDP), (international markets, 2010).

Remittances are playing an increasing large role in the economies of many countries, contributing to economic growth and to the livelihood of less prosperous people, though generally not to the poorest of the poor. However, remittances cannot be fully discussed without an insight on the rate of migration in the world. The total number of international migrants has increased over the last 10years from an estimated 150million in 2000 to 214 million in 2010.


In order words, 1 out of every 33 persons in the world today is a migrant whereas in 2010, 1 out of every 33 persons was a migrant. (International Bureau, 2010). To that effect, it is worth noting that the rate of remittances is highly dependent on the rate of migration. Remittances from world estimates have increased exponentially from USD 132 billion in 2000 to an estimated USD 440 billion in 2010. The top recipient countries of recorded remittances are India, China, Mexico, the Philippines and France with United State being the largest by far sender of remittances with USD 48.3 billion. Saudi Arabia ranks second largest sender followed by Switzerland and Russia. (International Bureau, 2010). A majority of remittances from US has been directed to Asian countries like India (approximately 66 billion USD in 2011), China (approximately 57 billion USD) and Philippines (approximately 23 billion USD), (World Bank, 2010).

 Most of the remittances happened by the conventional channel of agents like, Western Union, UAE exchange, Money Gram or Xpress Money Service. However, with the increasing relevance and reached of the internet, online and mobile phone money transfers from companies such as Remittances to India and have grown significantly (World Bank, 2011). Remittances impact the living standard of the world’s poor countries and the international efforts to support the entry into this business of   community    organization,     Microfinance    institutions, NGO’s, Cooperatives, has opened windows to the entry of these actors   in the industry and it entrance has been successful in many markets. Remittances provide the most tangible link between migration and development, a relationship that has been increasingly felt during the 2008 and 2010 economic crises. On the positive side, remittances are believed to reduce poverty, as it is the poor who migrate and send back remittances. But this view has its critics. It is also sometimes argued that remittances may increase inequality, because it is the rich who can migrate and send back remittances making recipients even richer. These questions should be studied at the macro level using cross country data and at the micro level using household survey. The effect of remittances depends on their use, especially on schooling of children.

 Remittances to Africa play an important role to national economies, but little data exist as many rely on informal channel to send money home. African countries send home more than 40 billion USD to the region each year but restrictive laws and costly fees hamper the power of remittances to lift people out of poverty (IFAD, 2009). The power of remittances can be catalyzed by easing restrictions and making it less costly for African countries to collect this money. The African countries have over 30 million people in the Diaspora and of the entire world regions however. Remittances flows to and within Africa approached US 40 billion dollars with countries in Northern Africa such as Morocco, Algeria, and Egypt being the major recipient in the continent. In Africa, the annual average remittances  per migrants reach almost 1200 USD and on a country by country, its represent 5% of GDP and 27% of exports. The mobility of Africans within these regions has been followed by the sending of regular amounts of money. Nigeria is by far the top remittances recipient in Africa, accounting for 10billion USD in 2010, a slight increase over the previous year ($9.6 billion). Other top recipients include Sudan ($3.2 billion), Kenyan ($1.8 billion), Senegal ($1.2 billion), South Africa ($1.0 billion), Uganda ($0.8 billion), Lesotho ($0.5 billion) and Cameroon (54179780) in 2011. As a share of gross domestic products, the top recipients in 2009 were: Lesotho (25%), Togo (10%), Cape Verde (9%), Cameroon (8%) and Nigeria (6%) to name a few (World Bank, 2010).

 Cameroon is found in central Africa with a population of about 20 million people. However, this population keeps fluctuating over the years due to the rate of migration in the country. Cameroonian emigrants were estimated at 170,363 in 2007. France with 38,530 migrants is the preferred destination of Cameroonians, followed by Gabon (30,216), Nigeria (16,980), and the United States (12,835), (DHRC, 2007). According to the partial data compiled by the African affairs Directorate of the ministry of external relations of Cameroon, between 250,000 and 300,000of Cameroonian lived in the Gulf of Guinea states between 2000 and 2004, essentially because they belong to the same ethnic groups and geographical area (Chouala, 2004). The majorities are long-term migrants given that 40% reside in their country of emigration for over 10years and 16% for a period of five to ten years. Cameroon is a significant figure of highly skilled workers. In 2000, 17% of Cameroonian population with a higher education emigrated (Douquier and Marfouk, 2005). During the 1995-2005 period, 46% of Cameroonian Doctors, 19% of nurses immigrated to selected countries.

According to Cameroonian medical association, 4,200 Cameroonians doctors mostly specialists are working abroad. Migration in Cameroon has great impact on the national economy. Indeed the transfer of funds by Cameroonian emigrants helps fight poverty. According to the World’s Bank, the amounts of remittances from Cameroonian migrants was estimated USD 103 million in 2005 that is 2.5% of official development aid.

Migrants’ remittances to their countries of origin constitute considerable financial manna and crucial financial support that contributes to increasing the income of the recipient families. Thus, they represent the most significant element of the relationship between migration and development. These remittances are not only considered financial transfers, but also as social transfers.

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