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RURAL-URBAN MONEY TRANSFERS

An important aspect of the h k s maintained by the migrants is the gifts of money received and sent. The significance of these flows exceeds the effect of the money on the finances of the family and the migrant; the flows are indicative of the social relationships.

We consider first the money received from the rural home area by the migrant. Sec- ond, the money remitted to the rural areas is analyzed. In both cases, the magnitude of the flows is presented and the determinants of the flows are discussed.

The Rural Support for the Migrant

According to the migration survey results, the men received an average of KShs.2 per month from their home areas during the first 3 months of their urban stay

.*

By the fourth quarter after migration this level of rural support for the migrants had dropped t o 5 1 percent of the first-quarter level. Given our estimate of 267,330 male

*As reported in Table 7.7, 86 percent of the unelnployed and 97 percent of the employed did not receive any cash from their home areas. Therefore, the s r ~ ~ a l l minority who were supported received a n average of KShs.30 a month.

migrants in the 1964-to-1968 period, this implies an annual rural-to-urban financial flow of approximately KShs.300,000. This sum is just a fraction of 1 percent of Kenya's annual gross domestic product.

To determine whether there are significant differences in either the rural sources or the urban destinations of the funds, the rural-to-urban financial flow per month during the first quarter after migration was apportioned among all possible rural-urban migration combinations. This distribution of the rural support for migrants was compared with the distribution of migration flows among all possible rural-urban migration combinations (based on Table 3.1). Differences between the observed distributions were not statistically significant.* Therefore, the rural-to-urban flows of money among the various possible rural-urban combinations merely reflect the relative importance of each combination in the total migration process.

An attempt was made to explain the variation in the amount received by each migrant during his fust quarter of urban residence. The results are not presented here because we were not able to explain the variations. The adjusted coefficient of variation for ordinary least-squares regression, with 967 degrees of freedom, was 0.02. The only variable that proved to be statistically significant was the employment status of the migrants after arrival in town. (Other variables entered in the regression equation were the urban income of the migrant, whether he was head of a household, whether he owned a farm, the amount of land owned by the migrant's father, and the employment status of the father.) Those who failed to obtain employment during the fust quarter after arrival received, on the average, KShs.3 per month more than those who obtained employment during this initial period.

In studying the characteristics of the migrants who were supported by their rural home areas, we found that the men who possessed land that was producing cash crops and the migrants who were attracted to a particular urban center because of the amenities avdable there received financial assistance significantly above the sample average. For other personal characteristics such as age, education, marital status, or activity or passivity, the differences in the amount of assistance are not significant.

By the fourth quarter after migration the amount received by the owners of land producing cash crops drops off to zero. The average amount received by the men who were attracted by urban amenities actually increases from the first to the fourth quarter.

Again, this latter amount received is significantly above the sample average. This observed increase in support holds true only for the men in the four largest urban centers.

In relating this empirical evidence from Kenya to the above discussion on the nature of rural urban ties, we must keep several factors in mind. First, the observed cash flows understate by a considerable amount the actual rural support. The transportation costs of the move and the cash savings carried by the migrants are not included in the survey results.

According to the Mitchell thesis, these would account for the bulk of the rural-to-urban financial flows. Secondly, studies in other countries indicate large rural-to-urban financial flows, in the form of school fees and living costs, from the rural areas where young people have to leave the home area to obtain formal education (Connell et al. 1976,p. 102:Town Drift 1973, p. 119). Our sample was designed to eliminate the student migrant so this form of rural support was not evident in the survey results. Thirdly, the role of the trans- fer of goods in the rural support offered to migrants is not considered. This omission

*Based o n a chi-square test using a significance level o f p < 0.05. The rural source unit used was the province.

probably accounts for a substantial portion of the support offered from areas withlimited opportunities to earn cash income.

With these limitations to the data used, several conclusions can nevertheless be drawn.

First, the results obtained are consistent with the Mitchell thesis that h i t e d rural eco- nomic opportunities are propelling people outward t o locations where income could be obtained. Average rural support of KShs.2 per month per migrant is simply inconsequential given the urban cost of living. Stark (1976, p. 14) assumes, for the typical migrant, that urban living costs are approximately two-thirds of the earnings earned by the migrant when he obtains employment. Even the KShs.30 a month received by the limited number of migrants who were being supported is well below this level.

The two other sources that provide evidence on rural-to-urban financial flows in Kenya also lend support to the Mitchell thesis. Knowles and Anker (1977b, p. 7) report rural-to-urban transfers account for merely 6 percent of all income transferred in Kenya.

According to Weisner (1972, pp. 134-lSl), men leave rural areas because they cannot earn the cash income needed to meet their limited aspirations. In the case studies reported by Weisner, the assistance for transport and urban living costs received by the men was provided by employed urban residents who had migrated previously. The rural-based families are not portrayed as "investing" rural resources for the purpose of purchasing an urban income stream. Similarly, Hutton (1973, p. 59) reports for her Ugandan survey that gifts from home, if any, were limited to bus fare plus enough cash for the first few days in town. Two-thirds of her sample had not received any gifts after they had arrived in town.

Nevertheless, it is possible that some portion of the limited number of men in our sample who were receiving assistance from home did represent a form of rural investment as envisioned by Stark. To begin with, the men with land used for cash cropping were receiving significantly above-average amounts. Also, the amounts from Central Province were higher than from Eastern and Nyanza provinces. We had noted earlier that some men in Central Province had land and this land would be readily accessible to the major urban markets. In contrast, Nyanza Province is distant from the major urban markets and Eastern Province does not receive the regular rainfall that is more characteristic of Central Province. But, the evidence for this possibility is weak. The above-average support provided for men who were attracted to the larger urban centers by the amenities is hardly consis- tent with rural families' "investing" their resources in migration.

Urban Income Remitted t o the Rural Home Area

The extent of urban-to-rural financial flows is of quite a different magnitude; on average, they exceed that of rural-to-urban flows by a multiple of 2.4. (In their survey, based on a more comprehensive measurement of rural-to-urban financial flows, Knowles and ~ n k e r ' ( 1 9 7 7 b , p. 7) report a multiple of 8 for the amount by which urban-to-rural flows exceed the flows in the opposite direction.) Again, the distribution of the urban-to- rural flows among possible rural--urban migration combinations does not vary significantly from the distribution of the observed migration flows among these migration combinations.

The relative magnitudes of the financial flows reflect the reverse of the migration flows.

For the total sample, the average amount remitted was KShs.43 a month as of December 1968. These remittances represent 13 percent of the income earned by the

men in the saniple. Fifty-nine percent of the men reported remitting regularly t o their home areas. This subset of the total sample sent an average of KShs.75 a month, whicli equals 2 2 percent of the income that they were earning at the time. An additional 16 per- cent of the total sample reported remitting some money sporadically.

For the subset of the total sample that was remitting money regularly, 41 percent started sending money in the same quarter that they arrived in their respective urban des- tinations. An additional 3 3 percent started remitting regularly during the course of the remainder of the first year after arrival. Only 1 2 percent of this subset delayed starting regular financial remittances to their home areas until the tllird year after arrivingin town.

The extent of remittances reported in our sample is substantially less than that obtained in other surveys in Kenya. On the basis of information provided by Knowles and Anker (1977b, pp. 6 and 7), it would appear that the people in their sample remitted on average KShs.103 a month t o rural areas. Johnson and Whitelaw obtained an average amount of KShs.86 per month. Of the 1,140 males in the sample who had some income in December 1970, 88.9 percent responded that they regularly sent some money o u t of Nairobi

. . .

. The average monthly income for the sample was 41 1.5 shillings per month, so 20.7 percent of the sample urban income was remitted (Johnson and Whitelaw 1974, p. 474). They concluded (1974, pp.477-478): " .

.

. on aggregate, rural income isincreased by 2 0 percent by the institution of remittances." Tllis estimate is dependent on two un- proved assumptions, both of whicli bias their estimate upward. First, it is not clear that high-income earners remit the same proportion of their income as those in the middle- and lower-income groups sampled. Their own analysis indicates that the proportion of income remitted varies inversely with the level of income earned (Johnson and Whitelaw 1974, p. 475). Second it has yet to be shown that Nairobi is representative of the other urban centers in Kenya.

Our 1968 survey - based on the subset of the urban population who were recent in-migrants - indicates that men in the three smallest towns remit above-average amounts.

The amount remitted from three of the four intermediate-sized urban centers, Mombasa, Kisumu, and Eldoret, was well below average. The effect of the below-average remittances was sufficient to make the amount remitted from Nairobi and from the fourth intermediate- sized town, Nakuru, some KShs.5 above the sample average. Therefore, there is evidence of considerable variation between urban centers in the proportion of income remitted.

The earlier discussion on rural-urban ties suggests two basically different sets of hypotheses on the determinants of the urban-to-rural remittances. The one set, based on Mitchell and others, focuses on the migrant, who cannot afford t o break completely the economic, social, and psychological links t o his rural home area. According to this view, some minimum amount of remittances is essential to maintain a rural alternative if desired urban opportunities fail to materialize or cease t o exist.Therefore, the proportion ofurban income that is remitted will vary inversely with the level of income.

Similarly, the proportion of urban income remitted will vary inversely with the level of education of the migrant, the length of the urban stay, and the coinmitment of the migrant t o an urban way of life. The moreeducated are hypothesized to have a greater ability t o obtain more secure urban positions and t o cope with an alien environment. As a result, their need to invest in rural ties is less than for migrants with limited formal educa- tion. Also. the longer the migrant is in an urban environment, the more likely he will de- velop the means to become socially and economically secure; hence the need to maintain

ties to the rural area will decline. Similarly, an intention to remain permanently in an urban setting will cause the migrant to develop urban substitutes for some of the existing rural ties.

Alternatively, if the migrant is the head of a household but he finds it necessary to leave lus family in the rural home area, this is clear evidence of strong ties to the rural home area. In such cases it is hypothesized that the proportion of urban income remitted will be significantly larger than for the heads of households with families resident in town.

The younger unmarried men will probably fall between these two extremes.

The second set of hypotheses, following the argument of Stark, is premised on the assumption that the initial intent of the rural-urban move was to tap an alternative income source for the rural-based family. Therefore, the proportion of urban incorne remitted will vary directly with income because the migrant wfl keep only what is neces- sary to cover urban living costs.

Sinlilarly, the proportion of urban income remitted will vary directly with the schooling completed by the migrant, the length of the urban stay, the migrant's intent to return eventually to rural farming activity, and the possession of productive land by the migrant or his family. The land ownership hypothesis is a necessary condition for the Stark thesis. The intent to return reflects a commitment to a rural rather than an urban way of life. Therefore, the proportion of income remitted wdl be higher than for those who see their future lying in town. The basis for the hypothesized relationships between remittance flows and the migrant's education and the length of his urban stay is the assulnption that urban income will be correlated positively with both variables. Indeed, entering urban income, education of the migrant, and the length of urban stay simultaneously as explana- toly variables may create a problem of multicollinearity.

In summary, the hypothesized regression model is:

where R is the amount remitted per month divided by monthly income as of December 1968; Y is urban income per month as of December 1968; E is the number of years of formal education completed by the migrant; L is the month of arrival in the urban center

- January 1964 is set at 13 and December 1968 at 72; H i s one if the migrant is married and zero if not; W is one if the migrant's wife is resident in a rural area and zero if not; F is one if the migrant possesses land that produces cash crops or food for family members and zero if not; P is one if the migrant intends to remain permanently in the urban center and zero if not; T is one if the migrant intends to return to farming activity in a rural area and zero if not;* v is a random error term assumed to have a zero mean and constant vari- ance and to be uncorrelated with the explanatory variables. The b's are regression coeffi- cients. The hypothesized signs for the coefficients are: b,, b,, and b, -- positive; b, -

negative; and b1 to b4 - intermediate. The sign for the coefficients of bl to b, will depend on which of the two theories is found to apply in Kenya.

The set of regression coefficients for the total sample and for each urban center is reported in Table 9.1. The explanatory ability of the regression model is reasonably good

* T and P d o n o t exhaust the possible cornbinations. There were migrants who intended to return to their rural home area a t the tirne of retirement and others who were uncertain about their plans for t h e future.

T A B L E 9.1 Repression results: the proportion of urban income remitted for the total sample and f o r each of the eight urban centers: dependent variable

is InR. P

Repression Urban Constant In Y 1nE InL H W F P T Adjusted R' Degrees of

nurliber center freedom

1 Total sample 4 . 3 4 0.41' 0.09' 0 . 1 9 0 . 3 2 1.54' 0.16 4 . 1 8 0.59 0.32' 9 8 1 (18.99) (3.07) (0.40) (0.86) (3.84) (0.32) (0.57) (1.48)

2 Nairobi 8 . 2 2 0.41' 0.18' 0.23 -0.27 2.12' 4 . 5 2 0.26' -0.15 0.32' 340

(1 1.40) (3.32) (0.53) (0.44) (3.25) (0.48) ( 1 1.57) (0.24)

5 Nakuru 3 . 9 7 0.44' 0.04 4 . 7 0 0.43 1.18 1.66 -0.02 0.94 0.52' 47

(5.77) (0.37) (0.58) (0.29) (0.73) (0.61) (0.02) (0.53)

Q.h.ri~e cocfficients are significantly different frolrl 0 at the I - and 5-percent levels, respectively. T h e significance of R' was determined from t h e F-test. T h e numbers in parentheses are t-ratios.

for cross-section data. The adjusted coefficient of variation indicates that 3 2 percent of the variation in the proportion of income remitted was accounted for with the set of explanatory variables. For the individual urban centers: the explanatory power of the model varies from 2 percent for Nanyuki t o 5 2 percent for Nakuru. The sets of explana- tory variables taken together were significant a t the I-percent level in all cases except Nanyuki where the F-statistic obtained was not significant.

Considering first Eq. 1 of Table 9.1, for the total sample, we found that the results appear t o support the set of hypotheses associated with the Stark thesis. The coefficients for urban income and education of the migrant are both positive and significant while the coefficient for the length of urban stay has the consistent negative sign, b u t it is not sta- tistically significant. (Given the way L was measured, a negative sign for b, indicates that the most recent in-migrants are remitting a smaller proportion of their urban income.)

These results are basically the opposite of those obtained by Johnson and Whitelaw (1974, Table 2 , p. 475) and Knowles and Anker. (Knowles and Anker (1977b, Table 7 , p. 30, Eq. (2)) report a significant coefficient with a negative sign for urban income b u t neither their education variable nor their length of stay variable has a significant coeffi- cient.) Johnson and Whitelaw, using a Nairobi sample not limited to recent in-migrants, found support for what we have termed the Mitchell set of hypotheses for both the vari- ables of urban income and the length of urban stay. The sign obtained for the education coefficient is positive also, as in our case, but they interpret this t o mean that the more- educated must remit a larger share of their income because the education costs invested in the migrant by the rural support group represent a debt that must be repaid (Johnson and Whitelaw 1974, p. 476). This interpretation for the education variable may apply here as well. Contrary t o expectation, the urban income and the education variables are not correlated. The simple correlation coefficient between the urban income and the education variables was 0.04. This low correlation between the two variables was evident for each of the urban centers as well, with the exception of Eldoret, for which the simple correlation coefficient was 0.39. The better educated chose t o remit a larger portion of their urban income even though their superior educational qualifications did not provide them with above-average urban income opportunities a t this early stage of their urban residence.

For the variables of urban income and the length of urban stay, the results obtained by Johnson and Whitelaw are the opposite of ours and are more difficult t o explain than

For the variables of urban income and the length of urban stay, the results obtained by Johnson and Whitelaw are the opposite of ours and are more difficult t o explain than