Migration, Remittances and Development in Southern Africa

Wade Pendleton, Jonathan Crush, Eugene Campbell, Thuso Green, Hamilton Simelane, Daniel Tevera and Fion de Vletter

Series Editor: Jonathan Crush
Southern African Migration Project
Migration Policy Series No. 44

PLEASE NOTE: Readers are welcome to reproduce and reference this article as long as appropriate acknowledgments are given.

EXECUTIVE SUMMARY

Remittances by migrants are now a focus of attention of governments and development agencies worldwide. Globally, cash remittances by international migrants now exceed $250 billion per annum, easily outweighing the value of development assistance. Over a third of remittances to developing countries originate in other developing countries. International cash remittances are only part of the story. Remittances in the form of goods and commodities are also extremely important, as are internal remittances from urban to rural areas within countries.

Debate rages on the development impacts of remittances and how these can be maximized. Advocates of migration as a positive force in development highlight the role of remittances in poverty alleviation in developing countries. Others view migration as having an essentially negative impact on development and poverty reduction, for three reasons. First, there is the difficulty of converting remittances into sustainable productive capacity. Second, remittance income is rarely used for productive purposes but for direct consumption. Very little is directed to income-earning, job-creating investment. Finally, remittances increase inequality, encourage import consumption and create dependency. These opposing views frame much of the contemporary debate about migration and development.

In the Southern African context, this debate has been difficult to resolve because so little is known about remittance flows and usage. In response, SAMP devised the Migration and Remittances Survey (MARS) to provide nationally-representative data on remittance flows and usage at the household level for 5 SADC countries: Botswana , Lesotho , Southern Mozambique, Swaziland and Zimbabwe . Subsequent rounds will expand the range of countries studied. Since most cross-border migration in Southern Africa is to neighbouring countries, the bulk of remittance flow is within the region itself. That is not to say that remittances are not received from outside the region. South Africa and Zimbabwe , in particular, have large overseas diasporas. One recent survey of Zimbabweans living in the United Kingdom , for example, found that 75% regularly remitted funds back home, most to support family members. With regard to intra-regional remittances transfers, the primary source countries for migrant remittances are South Africa and, to a lesser degree, Botswana .

SAMP partners led research teams in the five countries using the same questionnaire. Households were randomly selected and were included in the survey only if they had cross-border migrant or migrants. The MARS survey collected two different types of data: household data and individual data. Household data was collected from households with current or past cross-border migrants. In total, 4,700 household interviews were conducted in the five countries and information on almost 30,000 people was collected.

A similar sampling methodology was implemented in each country. The individual data includes cross border migrant information as well as information on other people living in the household. As well as providing unprecedented insights into remittance flows and usages, the MARS data provides an important contemporary profile of who the migrant population is in Southern Africa . The main features of this profile are as follows:

• Despite evidence of the growing feminization of migration globally, most migrants continue to be male. In Botswana , Mozambique and Swaziland over 80% of migrants are male (84.5%). Most female migrants are from Zimbabwe (44% of the total from that country) and, to a lesser extent, Lesotho (16%). The Zimbabwean pattern has changed appreciably in the last decade in response to internal political and economic conditions and the declining socio-economic position of women. In the Lesotho case, commentators have remarked on the growth in female migration in response to job loss and retrenchment in the South African mining sector. While this may be responsible for the relatively higher proportion of female migrants from Lesotho , it does not negate the finding that overall the vast majority of Basotho migrants have been and continue to be male.

• Traditionally, migration streams were dominated by the young and unattached. In this survey, only 7% of migrants were under the age of 25. In contrast, 41% were over the age of 40. Migration, in other words, has become a livelihood strategy of the middle-aged. At the same time, the survey picked up very little evidence of widespread cross-border children's migration. Three quarters of migrants under the age of 25 came from only two countries: Zimbabwe and Mozambique .

• Only 26% of migrants were unmarried and as many as 62% were married. The survey identified few migrant widows (3%) nor a particularly large number of divorced or separated migrants (again 3% of the total). The majority of the migrant widows were from Lesotho .

• Not only are more migrants older and married, many are also heads of households. Just over half the migrants were actually household heads rather than ordinary members of the household. In Botswana and Lesotho , for example, household heads make up over 70% of the total migrant flow. In Swaziland household heads were still in the majority (58%) but in Mozambique and Zimbabwe they were still very much in the minority (at 36% and 28% respectively). A few decades ago, sons and some daughters would have made up virtually all of the migrant stream. Migration is now clearly a career rather than a passing phase in most people's working lives.

• The only thing that has probably not changed that much in recent years is the educational profile of most intra-regional migrants. This survey showed that 15% of migrants had no education (50% of those from Botswana suggesting that in that country there are opportunities other than migration for the educated). The other major anomaly is Zimbabwe . Here, as might have been predicted, very few migrants have no schooling at all. Forty six percent have secondary education and 44% postgraduate education of some kind or another. Twenty two percent hold graduate or post-graduate degrees.

• Many migrant sending households across the region have a migration ‘tradition' which is passed from one generation to the next (usually but not exclusively fathers to sons). Many migrants come from families where parents and even grandparents have worked outside the home country. About 50% of migrants reported that their parents had been cross-border migrants; the percentages were highest in Lesotho (76%) and Mozambique (66%). Lesotho (24%) and Mozambique (44%) also had the highest percentages of grandparents who had been cross-border migrants. The most popular destination for parents and grandparents was South Africa .

• South Africa plays a central role in the cross-border migration picture with 86% of the total number of migrants currently working there. The proportion is over 95% in all countries except Zimbabwe . In other words, as expected, this is a story of intra-regional migration and South-South remittance flow from an economically-dominant nation to its poorer and smaller neighbours. Only 33% of Zimbabwe migrants work in South Africa , 17% are in Botswana and about 40% work in countries outside SADC.

• Minework was the most frequently cited occupation of international migrants from Botswana , Lesotho , Mozambique and Swaziland , despite the recent decline in job opportunities in that sector in South Africa . However, migrants from all four countries are scattered across a variety of other employment sectors and job niches. Skilled and unskilled manual work (17.5% of Mozambican migrants and 13.9% of Swazi migrants); domestic work (9% of Basotho migrants) and trader/ hawker/ vendor (6% of Mozambican migrants) were the most common.

• A smattering of skilled migrants were picked up from most countries. They included professional workers (4.8% of the total sample), office workers (2.4%), health workers (2.3%) and entrepreneurs (2.2%). In the main, however, the survey showed that the traditional forms of migration to South Africa still dominate with some diversification. In addition, most migrants are still in unskilled and semi-skilled categories. The survey picked up no evidence of a massive skills drain to South Africa , confirming previous observations by SAMP in this regard.

• Migrants maintain strong links with home, although their ability to return regularly is influenced by many factors such as how far they must travel, and cost and availability of transport. An average of 30% of migrants return home monthly, another 13% return home once in three months, 19% only make it home once a year and about 11% come home less often. Mozambique migrants seem to return home less often than migrants in the other countries (43% once a year); Lesotho migrants come home the most often (56% monthly). SAMP has adopted the concept of the “value-package” in analyzing remittance flows. In other words, remittances are viewed as a combination of cash and goods transfers. With regard, first, to cash transfers, the survey found the following:

• The vast majority (85%) of migrant-sending households receive cash remittances. This ranges from a low of 64% of households in the case of Swaziland to a high of 95% in the case of Lesotho . The proportion of migrant-sending households receiving remittances in the form of goods is more varied, from a low of 17% in the case of Swaziland and 20% in Lesotho to a high of 65% in Mozambique and 68% in Zimbabwe .

• The annual median amounts of money remitted to migrantsending households by country are: Botswana (R8,306), Lesotho (R7,800), Mozambique (R1,760), Swaziland (R4,800) and Zimbabwe (R1,093) . In terms of frequency of remittance, about 80% of migrants say they send cash remittances at least once every three months; Botswana (62%), Lesotho (77%) and Swaziland (71%) have the highest percentages who say they remit once a month.

• In every country remittances were a source of income for the majority of households. The figure was highest in the case of Lesotho (95% of households receive cash and 20% receive goods remittances), followed by Zimbabwe (84% and 68%), Mozambique (77% and 65%), Botswana (76% and 53%) and Swaziland (65% and 17%). The importance of goods remittances to households in Mozambique and Zimbabwe is noteworthy.

• Interestingly, for those who continually stress the importance of agriculture (and ignore migration) in rural development, relatively few households in each country reported income from the sale of farm produce, Mozambique was the highest at 21% of households, followed by Swaziland (9.5%), Zimbabwe (7%), Botswana (5%) and Lesotho (3%). In these countries, therefore, remittances easily outstrip agriculture in relative importance (as measured by the percentage of households receiving income from these sources). Just 237 of the 3246 households receive any income from the sale of farm products, averaging only R1541 per annum.

• Across the region as a whole, annual median income from wage employment and cash remittances is the same (at R4,800), followed by business income (R2,400), pensions (R2,038), casual work (R1,200), and remittance of goods (value R911). When cash and commodities are combined, however, the value of remittances exceeds all other forms of income. The median income from cash remittances is highest for Botswana (R9,229), followed by Lesotho (R8,400) Swaziland (R2,400), Mozambique (R1,980) and Zimbabwe (R1,093). Remittances in the form of goods amount to a value of R2,307 in Botswana , R1,257 in Mozambique , R1,000 in Lesotho , R600 in Swaziland and R549 in Zimbabwe . In other words, goods remittances are relatively more important in Mozambique . Considerable attention is given in the remittance literature to the methods that migrants use to remit and the expense involved in remitting, through both formal and informal channels.

The main policy recommendations that come out of the identification of this problem is that governments and institutions at both ends should lower the transaction costs of remitting, as well as make it easier for migrants to access and use formal channels through reform of banking and other financial regulations. In the case of Southern Africa , most migrants are relatively satisfied with the methods they use. However, here geography plays a significant role. Most migrants work in neighbouring countries and return home relatively frequently. Unsurprisingly, personal transfer of cash and goods is easily the most important channel. The most popular ways of bringing money home are for the migrants to bring it themselves (average 47%), send it via a friend/co-worker (average 26%) or through the post office (average 7%). As with cash, the two most popular ways of transporting goods home are to bring them personally (average 66%) and via a friend or co-worker. It is hard to see how transaction costs on personal transactions can be reduced unless the reason for return home is only to transfer remittances, in which case transportation costs make this a very costly means of remitting.

A central question in debates about the developmental value of remittances is how households actually spend this income. In the countries surveyed:

• Food and groceries are by far the most important expenditure (93% of households purchased food), followed by transportation (44%), fuel (44%), utilities (38%), education (31%) and medical expenses (30%). Certain categories of expenses are more important in certain countries. Education (primarily school fees) is important in Zimbabwe (57%) and Mozambique (44%); medical expenses are important in Zimbabwe (40%), Swaziland (39%) and Mozambique (31%); savings is important in Zimbabwe (36%) and Botswana (28%); housing is a major category only in Zimbabwe (46%); clothes is a major category in Lesotho (73%) and Zimbabwe (54%); farming expenses are important only in Swaziland (39%).

• When the actual amount spent by category is compared, the largest median amounts are spent on building (R576), farming (R434), clothes (R267), food (R288), and special events (R239). Building is the largest median expense category in all five countries with food expense second in Lesotho (R400) and Mozambique (R251), third in Botswana (R346), fourth in Zimbabwe (R64) and fifth in Swaziland (R300). However, looking only at the amount spent on such items as building and special events costs skews the picture somewhat because these expenses affect relatively few households.

• When the computed weighted value of expenditure items is compared, the major importance of food as an expense category is revealed. It is the most important expense item in all five countries. Depending on the country, between 2 and 6 times more money is spent on food than the next most important expense item which highlights the importance of the food expense for migrant sending households. As indicated above, migrant-sending households in the countries surveyed spend the greater proportion of total income on food purchase. Other necessities, clothing, medical expenses, shelter, fuel and utilities consume the bulk of the rest. In other words, consumptionspending (for necessities not luxuries) constitutes the pre-dominant usage of household income, a pattern observed in many other parts of the world.

• Across the five countries, the most common expenditure items for remittance money are food (90% of households), school fees (52%), clothing (52%), and fares (transportation) (34%). The rank order changes a little for different countries but the items remain about the same. Certain categories of remittance contributions are more important in certain countries. In Swaziland farming items (seed, fertiliser, tractor) are important and seed is also important in Lesotho and Mozambique . In Botswana remittance money is used for cattle purchase (21%). Although of less importance, remittance money helps with many other expenditure items such as building materials and funerals.

• In all of the countries, except Lesotho , a significant number of households “invest” in children's education. Swaziland is the only country, however, in which household income is invested in any significant degree in agricultural activity. Nearly two thirds of the households that invest in agriculture across the five countries are in Swaziland . The importance of remittances for food is further emphasized by the ratings given to various items.

• Further dramatic proof of the importance of remittances to household food security and other basic needs is provided by a tabulation of the types of goods that migrants send home. There is little evidence of luxury goods being remitted, Instead, clothing (41% of households) and food (29%) are clearly the items most frequently brought or sent (Table 22). Mozambican migrants bring more building materials than migrants in other countries (for example, roofing 16% and cement 9%) and Zimbabwean migrants are the only ones who have a significant percentage of goods for sale (14%).

The survey showed very little evidence of re-investment of income (remittance and otherwise) in entrepreneurial or other income-generating activity. Finally, many migrant sending households do not have savings. Indeed, given the low incomes of many households, it is not all that surprising that many households report borrowing money during the previous year. The Lesotho percentage is highest (69%) but between 42% and 49% of households in the other countries say they borrowed money.

Clearly migration and poverty are closely related in this region. The migrant-sending households of Southern Africa are generally poor although the degree of poverty does vary. Migration is a livelihood strategy of the poor. Remittances in cash and kind keep poverty at bay but they do not do much else. There is very little evidence, as yet, that remittances in Southern Africa have developmental value, as conventionally defined. Equally, they are critical for poverty alleviation in many households.

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