Remittance Inflows and Poverty Dynamics in South Africa: An Empirical Investigation

Abstract

In this study, we investigate the impact of remittance inflows on poverty reduction in South Africa, using time series data from 1980 to 2017. The main objective of this study is to establish whether South Africa can harness remittance inflows to alleviate poverty. Two poverty proxies, namely household consumption expenditure and infant mortality rate, are used in this study. To ensure robustness of the results, both income and non-income proxies of poverty are employed. Using the autoregressive distributed lag (ARDL) bounds approach, the study found that remittance has a negative impact on poverty in the short run and in the long run when household consumption expenditure is used as a proxy for poverty. However, when the infant mortality rate is used as a proxy, remittance is found to have no impact on poverty. It can be concluded that the impact of remittance on poverty is sensitive to the proxy used. The study concludes that South Africa could benefit immensely from some forms of remittances in its quest to poverty alleviation.