Remittances, ICT and Doing Business in Sub-Saharan Africa

Abstract

Purpose -This study examines how linkages between information and communication technology (ICT) and remittances affect the doing of business.Design/methodology/approach -The focus is on a panel of 49 sub-Saharan African countries for the period 2000-2012. The empirical evidence is based on Generalised Method of Moments.Findings -While we establish some appealing results in terms of net negative effects on constraints to the doing of business (i.e. time to start a business and time to pay taxes), some positive net effects are also apparent (i.e. number of start-up procedures, time to build a warehouse and time to register a property). We also establish ICT penetration thresholds at which the unconditional effect of remittances can be changed from positive to negative, notably: (i) for the number of start-up procedures, an internet level of 9.00 penetration per 100 people is required while (ii) for the time to build a warehouse, a mobile phone penetration level of 32.33 penetration per 100 people is essential. Practical and theoretical implications are discussed.Originality/value -To the best of our knowledge, this is the first study to assess linkages between ICT, remittances and doing business in Sub-Saharan Africa.JEL Classification: F24; F63; L96 O30; O55

Foreign aid and entrepreneurship in Africa: the role of remittances and institutional quality

“…With basic institutional conditions and efficiently functioning markets, Ali et al (2019) support the existence of innovative and corporate entrepreneurship development. Asongu et al (2018a; establish that the interactive term of mobile phone penetration and each of governance indicators spurs entrepreneurial development. In addition, Brixiova and Égert (2017), in their study, document that the complementary effect of institutions and education would go a long way in fostering the creation of high-productivity private firms, output and employment.…”

“…However, we identify two studies that are almost related to the debate. The study of Asongu et al (2018a; shows the channels on how information and communication technology (ICT) and remittances impact on doing business in Africa. Their findings show net negative impact on doing business indicators.…”

“…These studies reveal both positive (check Aparicio et al 2019;Samadi 2019) and negative (see Fredstrom et al 2020;LêKhang and Thành 2018) association between the duos. Notwithstanding, some studies (Asongu et al , 2018a;Escandon-Barbosa et al 2019) believe that institutions alone cannot positively influence entrepreneurial activity. It is on this note that this present study investigates the role of institutions in the foreign aid-remittancesentrepreneurship nexus.…”

Remittances and value added across economic sub-sectors in Sub-Saharan Africa

“…According to the narrative, other established rewards associated with remittances inflow entail: cyclical characteristics, low volatility in capital and higher reliability on this external flow category. In summary, as recently summarized by Asongu, Biekpe and Tchamyou (2019), there is a growing interest from scholars and multilateral developments institutions on the importance of remittances in the doing of business and industrial development in Africa. In the light of this growing interest, the focus of this article on the importance of increasing remittances for value added across various sectors in the economy is motivated by an attendant gap in the scholarly literature.…”

“…Studies that are closest to the positioning of this research are Asongu, Biekpe and Tchamyou (2019) and Efobi, Asongu, Okafor, Tchamyou and Tanankem (2019). The former has investigated nexuses between remittances, ICT and the doing of business in SSA to establish ICT thresholds at which remittances promote the doing of business while the latter has focused on nexuses between remittances, financial development and Africa's industrialization.…”