Do migrant remittances minimize the impact of macro-volatility on the poor in Ghana?

This paper investigates whether migrant remittances have been a source of income smoothing in Ghana, particularly in times of macro-volatility.

The main findings include:

• migrant remittances are counter-cyclical in Ghana: inflows of remittances increase in times of economic shocks
• remittances significantly affect household welfare and therefore tend to reduce any economic shock that affects household income and consequently welfare. This is particularly true in the case of food crop farmers in Ghana who tend to be the poorest of the poor
• remittances are the main coping mechanisms for these group of households in times of economic shock
• larger households have reduced welfare, an indication that there is the absence of consumption synergies within larger households
• the proportion of males receiving migrant remittances exceeds that of females. This trend is not encouraging since it has been established that transfers to female headed households have significant welfare effects than those transferred to their male counterparts.

Policy recommendations include:

• policies should be designed particularly for the poorest of the poor - food crop farmers - to ensure that the cost of transferring funds to relations in Ghana is reduced. Food crop farmers who receive remittances should be given a rebate on handling charges or higher conversion rate to improve their welfare levels
• policies should be designed to ensure that migrants not only send remittances to their relations but they can also hold foreign currency denominated accounts with competitive interest rates
• since remittances have become an important source of foreign exchange to the country, policies should be designed to ensure that remittance flows become sustainable.