Determinants of Cash Remittances: Case Study of Zambia

Abstract

Remittances have become more and more important for development since they form an external source of finance that currently exceeds official development aid, foreign direct and portfolio investments in many developing countries. They have the potential to contribute to economic growth and poverty alleviation through increased consumption, savings and investment, that is conditional on the context of the recipient country.  In Zambia, the importance of remittances is evidenced by the numerous money transfer institutions in both formal and informal sectors as well as the rapid increases in both international and local remittances. With electronic money transfer services provided by mobile telephone service providers, the domestic money transfer system has received a boost.  This study analyzed the major determinants of cash remittances among households in Zambia. The study used secondary data from the Central Statistical Office of Zambia. Results from the Probit model analysis indicates that gender, age of household head ,household size, disability ,attended secondary school, occupation and  distance to the market have a strong influence on whether a household will receive remittances. In particular, study results suggest the need to give the disabled an opportunity to actively participate in the main stream economic activities of the country and encouraging policies towards the development and expansion of market infrastructure.

Keywords: Determinants, Remittances and Zambia