Regulation, Cross Border Migrants and the Choice of Remittance Channels in South Africa

  • Oludele Akinloye Akinboade Gordon Institute of Business Science, University of Pretoria
  • Anrich Daseman Gordon Institute of Business Science, University of Pretoria
  • Trevor Taft Gordon Institute of Business Science, University of Pretoria
  • Victor M.S. Molobi RITR, University of South Africa
Keywords: Migration; Formal and informal remittances, Choice of remittance channel; South Africa

Abstract

Remittances have become an increasingly important factor in developing economies. Among others, compliance with onerous regulation requirements discourages the use of formal methods of remittances. The paper discusses results from a survey of the influence of regulation on the choice of migrants’ remittance channels in South Africa. It aims to highlight how regulation affects the choice between formal and informal channels of remitting funds. A questionnaire was administered to collect primary data from migrants seeking documentations from the Department of Home Affairs, those remitting funds at taxi ranks or bus terminals, and those remitting through commercial banks and money transfer operators. 275 responses were analysed using a Likert rating scale format of 1 (highest) to 5 (lowest). Regulatory requirements of documentary evidence are an important factor influencing the choice of the remittance channel used. Documentation requirement in the formal market causes migrants to be ineligible for the formal channels of remittances and is a factor that influences the choice of remittance channel. Restrictive visa requirements could easily push migrants to become illegal aliens which further deny them access to formal remittance channels. The paper adds to the academic literature on the determinants of remittance channels in Africa. Understanding the relevant issues could assist regulatory authorities to restructure the remittance market with a view to encouraging migrant workers to enter the formal financial system.

Downloads

Download data is not yet available.

References

Acosta, P. A., Baerg, N. R. & Mandelman, F. S. (2009). Financial development, Remittances, and Real exchange rate appreciation. Economic Review, 94(1), 1-12.
Akinboade, O.A. & Kinfack, E.C. (2012). Regulation, Awareness, compliance and SME Performance in Cameroon's manufacturing and retail sectors. International Journal of Social Economics, 39(12), 933 - 950
Albright, S. C., Winston, W. L. & Zappe, C. (2009). Data analysis and decision making (3rd Ed.). Mason: Thomson South Western.
Ambrosius, C., Fritz, B. & Stiegler, U. (2008).Capitalising on remittances for financial development - examples of regulations and policies. Retrieved from Migration Policy: https://www.lai.fu-berlin.de/homepages/fritz/publikationen/EADI_remittances_finalpaper.pdf
Anyanwu, J. C. & Erhijakpor, A. E. (2010). Do International Remittances Affect Poverty in Africa? African Development Review, 22(1), 51-91.
Bester, H., Hougaard, C. & Chamberlain, D. (2010).Reviewing the policy framework for money transfers. Cape Town: Centre for Financial Regulation & Inclusion.
Better Regulation Task Force (BRTF) (2003). Principles of Good Regulation. Available athttp://www.brtf.gov.uk/taskforce/reports/PrinciplesLeaflet.pdf, accessed on 31-03-2009
Bouoiyour, J. &Miftah, A. (2015).Why do migrants remit? Testing hypotheses for the case of Morocco.IZA Journal of Migration, 4(2), 1-20.
Bracking, S. & Sachikonye, L. (2010).Migrant Remittances and Household Wellbeing in Urban Zimbabwe. International Migration, 48(5), 203-227.
Daseman, A. (2013). Factors driving the choice between formal and informal cross border remittances Masters of Business Administration Dissertation submitted to the Gordon Institute of Business Science, University of Pretoria, November 2013
Donelly, L. (2015). Sending money out of SA set to become easier and cheaper, Mail and Guardian, 9 June, available at http://mg.co.za/article/2015-06-09-sending-money-out-of-sa-set-to-become-easier-and-cheaper, accessed 14-12-2016
Kosse, A. & Vermeulen, R. (2014).Migrants’ Choice of Remittance Channel: Do General Payment Habits Play a Role? World Development, 62(c), 213-227
Kotze, H. & Hill, L. (1997). Emergent Migration Policy in a democratic South Africa. International Migration, 35(1), 5-35
Lucas, R. E. & Stark, O. (1985).Motivations to Remit: Evidence from Botswana. Journal of Political Economy, 93(5), 901 - 918.
Maharaj, B. (2009). Migrants and urban rights: politics of xenophobia in South African cities. L’espace Politique, 8(2), 1-10. Available at https://espacepolitique.revues.org/1402?lang=en, accessed on 10-12-2016
Maphosa, F. (2005).The impact of remittances from Zimbabweans working in South Africa on rural livelihoods in the southern districts of Zimbabwe. University of Zimbabwe, Department of Sociology. Johannesburg: University of Witwatersrand.
Mookerjee, R. & Roberts, J. (2011).Banking services, transaction costs and international remittance flows. Applied Economics Letters, 18(3), 199-205
Organisation for Economic Co-operation and Development (OECD). (1994). The OECD Reference Checklist for Regulatory Decision-making: A Draft Recommendation of the OECD”, PUMA (OECD, Paris)
Organisation for Economic Co-operation and Development (OECD). (2003). Privatising State-Owned Enterprise, an Overview of Policies and Practices in OECD Countries, OECD, Paris. Peberdy, S. (2010).Setting the scene: Migration and urbanisation in South Africa. Synthesis Report for the Atlantic Philanthropies. Pieke, F. N., Van Hear, N. & Lindley, A. (2007). Beyond Control? The mechanics and dynamics of 'informal' remittances between Europe and Africa. Global Networks: A Journal of Transnational Affairs, 7(3), 348-366. Puri, S. & Ritzema, T. (1999).Migrant worker remittances, micro-finance and the informal economy: Prospects and Issues. Geneva: International Labor Organization. Radlicki, M. (2015). The 30m-strong Africa diaspora likely sends $160bn home every year: Where does it go? Mail and Guardian, available at http://mgafrica.com/article/2015-05-29-remittance-in-africa-where-does-it-go. Accessed 12-12-2016 Ratha, D. & Xu, Z. (2008).Migration and Remittances Factbook 2008.Washinton DC: World Bank. Ruiz, I. & Vargas-Silva, C. (2009).To send, or not to send: that is the question. A review of the literature on workers' remittances. Journal of Business Strategies, 26(1), 73-98. Sander, C. (2004).Passing the Buck in East Africa: The Money Transfer Practice and Potential for Services in Kenya, Tanzania, and Uganda. MicroSave-Africa, Nairobi.www.microsave.org. Sander, C. & Maimbo, S.M. (2005).Migrant Remittances in Africa: A Regional Perspective, in Maimbo Samuel Munzele and Dilip Ratha (eds)Remittances Development Impact and Future Prospects, Chapter 2,The World Bank, Washington DC. Saunders, M., Lewis, P. & Thornhill, A. (2009).Research methods for business students (5th Ed.). Pearson: Prentice Hall. Segatti, A. (2011a). Migration to South Africa: Regional challenges versus national instruments and interests. In A. Segatti, & L. B. Landau, Contemporary migration to South Africa: A regional development issue (pp. 9 - 30). Washington: The World Bank. Segatti, A. (2011b). Reforming South African immigration policy in the post apartheid period (1990 - 2010). In A. Segatti, & L. B. Landau, Contemporary migration to South Africa: A regional development issue (pp. 31 - 66). Washington: The World Bank. Sharif Mahmud, A. S. (2012).Determinants behind the use of informal channels for remitting money from overseas by the wage earners of Bangladesh. Thailand: Asian Institute of Technology, School of Management. Siegel, M. (2007).Immigrant integration and remittance channel choice. Maastricht University. Maastricht: Maastricht Graduate School of Governance. Siegel, M. & Lucke, M. (2009).What determines the choice of transfer channel for migrant remittances? The case of Moldova. Germany: Kiel Institute for the World Economy. Statistics South Africa. (2015).Documented immigrants in South Africa, 2013, Statistical release P0351.4, Pretoria
Statistics South Africa. (2012a). Documented immigrants in South Africa, 2011. Statistical release D0351.4, Pretoria
Statistics South Africa. (2012b). Census 2011: Migration Dynamics in South Africa, Report No. 03-01-79 Pretoria
Taylor, J. E.& Fletcher, P. L. (2007).Rural Economies of the AmericasProgram. Retrieved April 16, 2012, from US Davis Univeristy of California: http://www.reap.ucdavis.edu/research/volume2
Truen, S. & Chisadza, S. (2012). The South Africa -SADC remittance channel’ Prepared by DNA Economics for FinMark Trust, Pretoria. Available at http://cenfri.org/documents/Remittances/2012/ The%20South%20Africa-SADC%20remittance%20channel_Report.pdf, accessed on 08-Dec 2016.
Truen, S., Ketley, R., Bester, H., Davis, B., Hutcheson, H. D., Kwakwa, K. & Mogapi, S. (2005). Supporting remittances in Southern Africa: Estimating market potential and assessing regulatory obstacles. Prepared by Genesis Analytics for CGAP and FinMark Trust
Van Eyden, R., Owusu-Sekyere, E. & Kemegue, F. (2011).Remittance inflows to Sub-Saharan Africa: The case of SADC. Department of Economics. Pretoria: University of Pretoria.
World Bank. (2015a).Migrants and Development Brief, Migration and Remittances Team, Development Prospects Group, Brief No. 24, Washington DC.
World Bank. (2015b).Migration and Remittances Recent Developments and Outlook, Migrants and Development Brief, No. 25, Washington DC
Published
2017-05-18
How to Cite
Akinboade, O. A., Daseman, A., Taft, T., & Molobi, V. M. (2017). Regulation, Cross Border Migrants and the Choice of Remittance Channels in South Africa. Journal of Economics and Behavioral Studies, 9(2(J), 201-214. https://doi.org/10.22610/jebs.v9i2(J).1661
Section
Research Paper