The East African member states have been told to develop a more vibrant method that will accurately capture remittance inflows from community member nationals living and working abroad.
The call was made by finance analysts in Kampala recently.
Latest World Bank (WB) data indicate that the East African states received $3.5 billion (Shs11.5 trillion) in remittances in 2015 with Uganda’s remittances growing fastest in the region at 21 percent.
Mr Aly Khan Satchu, a Nairobi based equity markets analyst with focus on East Africa in an interview with Daily Monitor on Monday, said: “Remittances are in most instances the biggest foreign exchange source for many East African countries. Remittances have proven a remarkable phenomenon.”
What diaspora bonds are
Diaspora bonds are essentially a form of government debt that targets members of the national community abroad, based on the presumption that their emotional ties to a country make investing in such products worthwhile.
Mr Satchu said: “These numbers are telling us that we need to create a big variety of product [with diaspora bonds springing to mind] for the diaspora.”
But Mr Satchu expressed reservations: “I believe remittances are undercounted big time and the real numbers are in fact bigger,” he said.
Commenting on the bank’s report, Mr Stephen Kaboyo, managing partner at Alpha Capital – a forex trading firm, said: “Given the economic challenges Uganda has endured, the increase in remittances is a big plus for the economy. Overall exports have dwindled and remittances have sort of filled the gap.”
He noted that despite the global slowdown which naturally would have a counter effect on money transfers for Uganda, this has played out differently but perhaps it can be attributed to the weak Shilling that enabled very attractive conversions.
During their annual diaspora summit last year, Mr Ronnie Mayanja, a journalist living and working in the US, said: “Many of us want to come and invest but we were left out during the feasibility study instead a consultant was hired to do the job.”
According to the WB, Uganda posted the highest growth in remittances with 21 per cent, receiving over $1.1 billion (Shs3.6 trillion).
Remittances to Uganda went up despite a mid-year prediction by Bank of Uganda of a $233 million (Shs777b) drop due to the tough economic environment the country was facing at the time.
Uganda was followed by Kenya with an 8.6 per cent increase, pushing its remittances to $1.54 billion (Shs5 trillion).
The Central Bank of Kenya informed our sister newspaper, The East African that diaspora remittances rose from the previous year’s $1.41 billion (Shs4, 6 trillion), becoming Kenya’s top foreign-currency earner. Tanzania received Shs2.5 trillion while Rwanda dropped to Shs514b from Shs577b in 2015.
Uganda posted the highest growth at 21 per cent, receiving over $1.1 billion (Shs3.6 trillion), followed by Kenya with an 8.6 per cent increase, pushing its remittances to $1.54 billion (Shs5 trillion). However, Rwanda’s dropped to Shs514b.