Motives, channels and migration for remittances: Evidence from Uganda, Senegal and Nigeria

Abstract

Abstract

Objectives

The objective of this study is to increase and deepen the knowledge of sending remittances to Uganda, Senegal and Nigeria by examining the determinants of the probability and amount of remittances and how they reflect the motives migrants have for remitting; by investigating the determinants of the choice migrants make between using official and unofficial remittance channels and how they reflect the different features of remittance markets; by developing a theoretical model for intra-household decision making regarding migration; and by analysing the determinants of the choice households and migrants make between international and internal migration. The results of the study may be of value in aligning remittance markets with the needs and motivations of migrants and in mobilising remittances more efficiently.

Framework and methods

The several motives for remitting are discussed in terms of the microeconomic theory of remittances, the theory of remittance channels is reviewed, and a model for intra-household decisions making regarding migration is developed. The existing empirical literature on motives for remittances and on the remittance markets of the countries under study is also reviewed. In the empirical estimations based on the above frameworks, migration and remittances survey data, jointly collected by the World Bank and the African Development Bank in the countries under study, are utilised. Five empirical estimation methods – the tobit model, the Heckman selection model, the two-part model, CLAD estimation, and the probit model – are employed in the examination of the research questions.

Key findings

The empirical results of this study imply that a variety of motives influence the remittance behaviour of Ugandan, Senegalese and Nigerian migrants. In addition, the motives differ in their relative intensities between different groups of migrants. On the whole and in accordance with previous research, the generally presumed altruistic motive is not explicitly supported by the estimations for any of the countries under study, and more self-interested concerns and contractual arrangements between migrants and their families – the exchange and the investment motive, in particular – seem to override purely altruistic ones. A diversity of factors also affect the choice migrants make between using official and unofficial channels, as well as the choice households and migrants make between international and internal migration. In terms of remittance channels, official remittance channels are generally more likely used by migrants residing in OECD countries, and by migrants with a high level of education, reflecting especially the differential access that different groups of migrants have to official channels. Other factors affecting the choice are more country-specific. The choice between international and internal migration, on the other hand, is determined by several factors – different in each of the countries under study – including, inter alia, the reason for migration, and the education and the potential occupation of the migrant. The effects of these factors reflect well the model developed to depict the migration decisions made in households.