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The benefits of foreign family remittances to Uganda’s economy post COVID-19

As the world commemorates the 2022 International Day of family Remittances with the theme “Recovery and resilience through digital and financial inclusion,” we must recognize the role of migrant workers though when COVID19 pandemic broke out in the country (March 2020) thousands of foreign Ugandan workers numbering then to forty thousand had challenges at their respective work places hence this led to the education in the amount of foreign remittances sent home. The remittance flows to Uganda declined by 26 per cent, from US$1.4 billion in 2019 to US$1.1 billion in 2020. Yet despite the decline, Uganda was ranked among the top ten recipient countries in sub-Saharan Africa.

A recent study by the International Fund for Agricultural Development (IFAD), on remittances to Uganda highlights the fact that innovative solutions have the potential to increase access to and use of remittances received by households for greater financial inclusion and investment opportunities. The study also recommends specific actions to safeguard and recover from the COVID-19 crisis. According to the International Fund for Agricultural Development (IFAD), “the average cost of sending money to Uganda remains high at 8.7 per cent, double the Sustainable Development Goal’s (SDG) recommended target of 3 per cent. But the pending National Payment Systems Act has the potential to achieve the set SDG target, create an enabling environment for digital financial and payment service providers, and increase competition and consumer protection.”

The Daily Monitor dated 20th April, 2022 stated that “The UN estimates that more than 620,000 Ugandans live outside the country, working in East Africa, Africa, Europe, Asia, Americas and Middle East, among others.” This number is huge economic booster to the country thus millions of families have in one way or another had their welfare systems and livelihoods improved through the different economic sectors the monies are invested into such as real estate, schools, agricultural farms, SMEs and micro –credit schemes.

As we commemorate this day, after the reading of the national budget on 14th June 2022, its incumbent on the government that all possible measures are developed to enhance the legal regimes that governor the channels which facilitate the transfer of money to the country by all Uganda’s migrant workers in addition to put in place methods that can also protect such. As the theme states digital and financial inclusion if its built on strong foundations backed by information sharing and access by the users will lead to an increase in the amount of money the country receives from abroad.

IFAD reports that one of the greatest catalysts for formal remittances during 2020 and 2021 was the accelerated adoption of digital technology by the migrant workers and their families. Both online and mobile digitalization have buoyed remittance flows during this challenging period and beyond. Mobile remittances alone increased 65 per cent during 2020 to US$ 12.7 billion (GSMA, 2021). This change was hastened by lockdowns and social distancing rules that spurred the move away from informal channels and the use of cash for senders and recipients. Digitalization is less costly than cash transfers and has reinforced the adoption of mobile money, thereby advancing the financial inclusion of migrants and their families.

Therefore, foreign family remittances do strengthen the country’s socio economic transformation with in and forward linkages to NDPIII, VISION 2040 and the achievement of the SDGs. To this effect, all stakeholders like the media can play an important role in educating the citizens about the benefits accrual from foreign family remittances.

Written by

Kiapi K. Freddie

Social Critic and Consumer Advocate

Email: [email protected]