Remittances, household food security, and entrepreneurship development: A case study of Mzuzu, Malawi

Abstract

With the substantial increase in migrant remittances to developing countries since the 1990s, there is a growing interest in migration and development among academics and development practitioners. Remittances, if channelled as investments into income-generating activities (IGAs), can be a crucial source of development finance to improve people's livelihoods from the bottom up. In the context of migration from low-income households, however, channelling remittances into IGAs can be more challenging as they first need to use remittances to meet their basic needs. It is also evident that remittance-receiving households use a major portion of the remitted income for food, indicating a strong link between remittances and household food (in)security. As such, the impact of remittances on livelihoods, food security, and IGA investment among migrant-sending families seems to be positive but context-dependent. However, the linkages between migrant remittances, household food security, and entrepreneurship development are not extensively explored empirically. To address this knowledge gap, this dissertation focuses on the case study of Mzuzu, Malawi and investigates whether or not remittances benefit receiving households by (i) improving livelihoods; (ii) increasing food security; and (iii) bolstering IGAs. The in-depth interview of 42 migrant-sending households and 10 returnee migrants from Mzuzu was conducted as part of the field study. In addition to that, some perspectives of 37 key informants were collected through interviews. The collected information was analyzed using qualitative techniques. The analysis demonstrates several key findings. Firstly, migration and remittances can have a positive impact on the livelihood of the families in sending areas through the improvements in the education of children as well as in the status of women in the family, in addition to an increase in family capital. Secondly, remittances help improve the households’ food security status as they can buy food directly and grow more food by investing in agricultural inputs. However, these positive impacts are mostly dependent on the volume and frequency of remittances, indicating that the improvements in household food security are likely to be short-term unless remittances are used to expand household income sources. As a result, households maintain improved food security status over the longer term. However, for such investments to occur, the households should be receiving remittances that exceed the family’s cash requirement to buy the food and fulfill immediate needs. As such, there needs to be an attractive incentive structure in place that enables families to invest remittances in IGAs. Thirdly, although remittances are not enough for leveraging investments, the returnee migrants were able to invest in micro-enterprises, create jobs, and even transfer skills, suggesting that informal migrants from low-income households can also be catalysts to development at the local level through brain gain. The study shows that remittances are mostly a support mechanism for the families left behind. The channelling of the remittances in promoting entrepreneurship through migration and remittances requires investment-friendly policy measures and an attractive incentive structure. The findings suggest that New Economics of Labour Migration (NELM) theory needs to extend to incorporate the broader context that influence the developmental impact of remittances on migrant-sending communities.