Remittance Inflows to Sub-Saharan Africa: The Case of SADC

This paper investigates the factors that drive or constrain remittances from South Africa to the countries in the Southern African Development Cooperation (SADC) region. Using annual data for 10 SADC countries from 1994 to 2008, System GMM by Arellano and Bover (1995) and seemingly unrelated regressions by Zellner (1962), we find that when cross-sectional dependence and individual effects are controlled for, the quality of financial service delivery, investment opportunities in the home country and migrant expectations of home country exchange rates are the main drivers of remittance inflows to the SADC countries in the panel. However country-specific differences exist.