IOSR Journal of Economics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 11, Issue 5 Ser. III (Sep. – Oct. 2020), PP 20-31 www.iosrjournals.org DOI: 10.9790/5933-1105032031 www.iosrjournals.org 20 | Page Are International Remittances Inflows Significant in Promoting Economic Growth in Sub-Saharan Africa? Abu, Prince Oshoke Regenesys Business School, Sandton, Johannesburg, South Africa Ihayere, Oseghale National Institute of Construction Technology and Management, Uromi, Edo, Nigeria Oghenerurie, Precious Uzezi Department of Economics, Faculty of Social Sciences, University of Benin, Benin City, Edo, Nigeria Abstract Empirically investigates the effect of international remittances inflows on economic growth in Sub-Saharan Africa from 1995 to 2015 using panel data of 36 Sub-Sahara African countries. Employs the fixed effect model, random effect model, and the dynamic panel data model (using the generalized method of moments system- GMM SYS) as its econometric methodology. Results show that international remittances have negative effect on economic growth in Sub-Saharan Africa. Hence, recommends that emigration policies should be put in place to prevent the inordinate brain drain of the region’s finest elites and also remittances inflows should be invested in productive activities and the advancement of local industries instead of increased purchase of imported products. Key Words: Remittances Inflows, Foreign Direct Investment, Economic Growth, Panel Data, Generalized Method of Moments System. JEL Classification: F24, F21, F43, C55, C40, --------------------------------------------------------------------------------------------------------------------------------------- Date of Submission: 11-09-2020 Date of Acceptance: 26-09-2020 --------------------------------------------------------------------------------------------------------------------------------------- I. Introduction International remittances mirror the local labour working in the global economy and have been put forward to explain the link between economic growth and integration with the global economy (Adenutsi, 2014). Net international migration has been increasing and more and more workers are leaving their home countries to work in foreign countries mainly due to better employment opportunities. With the dawn of globalization and the increasing development gap between advanced economies and developing regions, the number of international migrants is expected to increase to increase by approximately 2.5 percent annually (International Migration Report, 2010). This implies that there international remittances flows will increase and developing economies can maximize this opportunity through the reduction of remittances transfer costs, improved local financial systems and the implementation of pro-growth strategies to direct remittances inflows to finance development projects and enterprises. However, over-dependence on remittances will expose households to fluctuations in migration cycles and if the remittances are spent on unproductive and short-term consumption gains, they could result to higher inequality between households with access to remittances and those without, promote negative local cultural practices that are inimical to productive living, and increase the growth of the parallel foreign exchange markets and thus promote money laundering (Chimmhavu, Piesse and Pinder, 2005). The Sub-Sahara African region is largely undeveloped with economies predominantly characterized by high population growth rates, increasing unemployment rates, alarming poverty levels and low per capita GDP (Todaro and Smith, 2002). Table 1 gives the summary of some of the key macroeconomic performance indicators of Sub-Saharan Africa from the 1960s. Table 1: Macroeconomic Performance in Sub-Saharan Africa (1960-2015) Key Macroeconomic Indicators 1960- 1969 1970- 1979 1980- 1989 1990- 1999 2000- 2009 2010- 2015 Overall 1960- 2015 GDP per capita growth (annual %) 1.735 1.588 -1.404 -0.774 2.704 1.501 0.832 GDP per capita (constant 2010 US$ ) 1157.7 1439.1 1330.1 1173.7 1340.32 1612.39 1322.94 GDP growth (annual %) 4.255 4.359 1.434 1.975 5.498 4.301 3.577