Analysis of efficiency in allocating remittances to economic development by sub-saharan countries: A Data Envelopment Analysis approach (DEA)

Abstract

The financing of economic growth has been at the top of the priorities of African countries since the beginning of their accession to independence. Among external financing modes, migrant remittances are considered to be the most stable mode and do not present the risk of plunging developing countries into debt cycles. As evidenced by the 2021 World Bank report, these migrant remittances now represent a considerable share of the GDP of sub-Saharan countries compared to the 60s and 80s, when the use of external debt was a priority in these countries. It is therefore imperative to know how these sub-Saharan countries affect these transfers to support their economic development. In this article, we discuss a comparative analysis of sub-Saharan countries in relation to their efficiency in allocating remittances to economic development. The objective is to highlight the best-performing countries in the allocation of resources in general and remittances in particular. Based on the Data Wrapping Method (DEA), our results show that the most exemplary countries in terms of efficient allocation of remittances in economic development in SSA are: Côte d'Ivoire, Angola, Nigeria and Zimbabwe respectively.  While countries such as DRC, Ghana, Kenya and Senegal are the least efficient.  From an inefficient perspective, our analysis shows that all countries that have been found to be inefficient are for the most part for organizational reasons.

Keywords: Remittances, Efficiency, Economic Development, and Sub-Saharan Africa, Data Envelopment Analysis 

JEL classification: F24

Type of article: Empirical research