REMITTANCES AND HEALTH OUTCOMES IN SUB-SAHARAN AFRICAN COUNTRIES: UNDERSTANDING THE ROLE OF FINANCIAL DEVELOPMENT AND INSTITUTIONAL QUALITY

Abstract

Sub-Saharan Africa (SSA) is one of the highest recipients of remittances; however, this is inconsistent with the region’s growth and the state of its weak healthcare systems. This paper therefore analyses the effect of remittances on health outcomes for 39 selected SSA countries over the period 1996 to 2016. It considers the channels through which remittances affect health outcomes, including financial development and institutional quality. Using dynamic panel estimation, we find that remittances sustain health outcomes, while both financial development and institutional quality complement remittances in this respect. SSA countries should therefore continue to improve their financial sectors and develop the quality of institutions to an adequate level. Achieving sound financial systems and institutions would both allow and attract a substantial amount of remittances, benefitting human capital and health outcomes and alleviating poverty.