Community, Diaspora and Immigration
Uganda’s 2012 remittance outlook points to decline
Remittances have in recent past emerged as a major contributor to Uganda’s foreign exchange earnings and economic development but this year’s forecast is not looking good.
According to information from Bank of Uganda there are signals of a decline in remittances to a tune of $700 million down from $813 realised in 2011.
“We expect a decline this year and the projection is about $700 million,” BoU’s director of research, Dr Adam Mugume, said.
He said the major contributor to the low remittances has been the Eurozone crisis, a situation which has seen these economies-where most of Ugandans are based- experience economic stagnation and a resultant liquidity squeeze.
“In 2008, 40 per cent of the workers’ remittances originated from Europe. As of 2011, this had declined to 23 percent. This shows the impact of the global financial crisis,” Dr Mugume said.
In the last four years, the estimates indicate that workers’ remittances have exhibited a good record in performance, increasing every year. In 2008, the country received $732.4 million. In 2009 this went up to$753.6 million. In 2010 the country realised $772 million and in 2011, $813 million was sent.
Dr Mugume added: “Increasingly, Africa has seen an increasing source (of remittances), especially South Sudan, except this is where it is expected to suffer setbacks this year due to suspension of oil exports. Another source has been South Africa but it is equally facing challenges.”
North America (US and Canada) have remained major sources reflecting that these countries have been out of recession compared to Europe.
“Overall, remittances are facing challenges because different sources of remittances are constrained,” Mugume added.
Contrary to BoU’s projections, information from World Bank’s ‘Remittances and Immigration’ report published in November says officially recorded remittances to developing countries are expected to reach $406 billion in 2012, up by 6.5 per cent from $381 billion.
The true size of remittance flows, including unrecorded flows through formal and informal channels, is believed to be significantly larger.
Compared to private capital flows, remittance flows have shown remarkable resilience since the global financial crisis, registering only a modest fall in 2009, followed by a rapid recovery.
The size of remittance flows to developing countries is now more than three times that of official development assistance.