Exploring the link between international migration and remittances: a case study of African immigrants in Cape Town, South Africa

Abstract

Remittances from South Africa to other African countries have been a growing phenomenon over the past few years. A substantial proportion of such flow is informal and yet, the complexity and heterogeneity of migrants mean that relatively very little is known about which migrants remit, what they remit, how much and how, what the challenges are and how their remittance behaviour varies according to nationality. Using the case study of African immigrants in Cape Town, South Africa, this study sets out to explore the nexus between international migration and remittances, in particular the relationship between migrants' characteristics and remittance behaviour. This study is anchored around the international migration system theory, prospect theory and the social capital theory. The methodological approach is both quantitative and qualitative. The information was collected from an extensive literature review, survey questionnaires administered to 83 immigrants from Zimbabwe, DRC, Rwanda and Somalia, selected using purposive and snowballing techniques, a focus group discussion with 12 participants from the case study and observations of two informal remittance sending sites. This study found that African immigrants send cash, goods and social remittances to their respective countries. Furthermore, using nationality, education and income as the key variables of characteristics of immigrants, this study revealed that economic immigrants from Zimbabwe tend to remit cash and goods more frequently, Somalis remit more socially, Rwandese send goods using formal courier companies, while the Congolese remit through buses. In addition, educated and higher income African immigrants tend to remit formally, and more in terms of goods value and cash amount. This study further established that informal remittance systems still dominate. Beside cost, speed, safety, reliability, customer care, friendliness, trustworthiness and convenience; informal remittance operators offer flexibility through loans and the collection of remittances from regular senders at low service charges. Informal remittance systems also provide other services that attract immigrants. Formal remittance systems on the other hand, have no strong appeal for African immigrants, especially the less educated remitting in rural areas due to low coverage. They are also bureaucratic burdens, by requiring proof of income, and address as well as documentations that immigrants are not able to produce. In addition, the challenges related to the South African money transfer policy environment, the registration and licensing of Money Transfer operators drives remittances further underground. Within the context of remittances, the researcher recommended the measures needed to bolster the use of formal systems, this ranged from the government's relaxation of remitting requirements and licensing conditions, formal remittance operators' extension of their reach, provision of better information about their services and reduction in transfer cost, to informal remittance providers pooling their resources together in order to have a strong capital base that can be easily legitimized.