The Role of Remittance in Development: The Case of Rwandan Diaspora’ Remittances

Abstract

Remittances and development are progressively becoming inseparable areas. In other words, remittances are increasingly associated with development factors. This is because money transferred by the Diaspora to their native country is contributing to improving the living conditions of beneficiaries as well as the economic growth of the recipient country. This paper examines the contribution of remittances from Rwandan Diaspora to the national development of the country. The results revealed that the amount of money remitted during the four years assessed i.e. from 2006 to 2009 is an important contribution to the national income which exerts a positive impact on consumption and production as money circulates in various sectors. The rationale for remittances included health care issues and education; building houses; improvement of family life, i.e. poverty reduction; investment in business; purchasing animals and other important items. Findings further indicated that the problems faced during the process of transferring money were transaction costs, foreign exchange costs, taxation on remittances, and restrictive legislations in the host country.