5. Policy Implications of Findings
Two major policy issues naturally arise from the empirical findings in this study. First, a steady increase in
workers’ remittances inflow to SSA economies is observed to depress external trade balance over time and
across the selected countries within the sub-region. In terms of quantum, this relationship is statistically
insignificant; however, appropriate policies are needed to ensure that these financial flows are properly
channeled into economically productive uses so as to begin to contribute positively to the external sector of the
economies. Second, the positive sign and significant nature of the REER variable in explaining variations in the
external trade balance also require some further comments. Increase in this variable indicates a depreciation of
the local currency so the positive sign of REER is in line with theoretical expectation. This means that
appropriate foreign exchange policies (policies in support of weaker national currencies in order to promote
external trade) may be adopted across the SSA countries to maintain a healthy trade balance for the region.