Uganda received one of the largest sums in remittances in 2018, according to data from the World Bank. The country was the second and sixth largest to receive remittances in eastern and sub-Saharan Africa, respectively.
The World Bank report indicates that Nigeria, Ghana, Kenya, Senegal, Zimbabwe and DR Congo received more money from abroad than any other country.
Uganda received remittances worth $1.2b in 2018 while Nigeria received $24.3b, Ghana $3.8b and Kenya $2.7b. Senegal received $2.2b while Zimbabwe and DR Congo received $1.9b and $1.4b in the period, respectively.
Remittances to sub-Saharan Africa were estimated at $46b in 2018 from $42b in 2017. Uganda saw her remittances grow from $1.1b in 2017, contributing at least 4.5 per cent of the country’s gross domestic product.
Earlier this year, Bank of Uganda indicated that half of Uganda’s remittances currently come from the Middle East, where the country is estimated to have at least 150,000 workers.
Projections indicate that remittances into sub Saharan Africa will keep increasing but at a lower rate to $48b by 2019 and $51b by 2020.
The slow pace is attributed to a slowdown in growth of advanced economies due to weak exports.
The report also indicates that the cost of sending money, especially to sub-Saharan Africa continues to be an impediment to remittance inflows.
According to the report, the average cost of sending $200 to sub-Saharan countries averaged at 9 per cent in 2018. For instance, sending money from Tanzania to Uganda is tallied among the highest cost corridors attributed to high transfer fees at 16 per cent and 1 per cent in forex exchange margins.
Banks rank as the most expensive means of sending remittances at an average cost of 10 per cent in the first quarter of 2019, whereas post offices and money transfer operators charged an average of 5.5 per cent and 6.2 per cent, respectively.
The report also highlights national post offices as the possible solution to the high cost of sending remittances.
“Opening up national post offices, national banks and telecommunication companies to partnerships with other money transfer operators could remove entry barriers and increase competition in remittance markets,” the report reads in part.
The report comes at a time when some political leaders are asking government to ban labour export to curb cases of trafficking and human rights abuse.