Financial Access for Migrants and Intermediation of Remittances in South Africa

Abstract In this paper, I examine the state of access to financial services by migrants in South Africa and the intermediation of remittances using a case study of Zimbabwean migrants. I observe that migrants generally use informal channels to intermediate remittances. While this phenomenon can technically be attributed to immigration laws and the financial regulatory environment, there are other factors at play, such as cultural inertia. I observe financial access for migrants to be positively related to migrant legal status, income level, savings level and education level. Furthermore, I note that financial access is not correlated with the choice of the mode of remittance transfer. The majority of migrants with financial access still prefer to utilize informal transfer mechanisms. Policy interventions that have the effect of improving financial access include the “formalization” of the legal status of migrants, improving their wage levels and access to education, and expanding savings programmes to migrants.