Uganda and Africa in general face a decline in remittances

The World Bank recently released data showing how payments from Ugandan workers abroad had fallen by $300m in 2020.

The information that is contained in the World Bank Global Knowledge Partnership on Migration and Development. It shows how remittances, during this period, reduced to $1.1b from $1.4b in 2019 as a result of Covid-19 pandemic adverse effects.

These payments from abroad have a major role in aiding the growth of GDP plus supporting household: health and education among others.


The fall however did not deter Uganda as she still remained among the top ten recipients of remittances. Uganda continued holding pole position among sub Saharan African countries.

During this period, Nigeria, which got $17.2b, was the biggest beneficiary of remittances in Africa, followed by Ghana ($3.6b), Kenya ($3.1b).

Senegal ($2.6b) DR Congo ($1.9b), Somalia ($1.7b), South Sudan ($1.2b), Zimbabwe ($1.2b), Uganda ($1.1b) and Mali ($1b) followed.

The World Bank also showed how there was an extensive fall in remittances to sub-Saharan Africa. This declined by at least 12.5 per cent in 2020 to $42b with Nigeria, whose remittances fell by 27.7 per cent. This loss generated the biggest effect.

Remittance increment in Zambia was reported to have risen by 37 per cent, Ghana (5 per cent). In Kenya (9 per cent) and Mozambique (16 per cent).
Remittance flows to sub Saharan Africa in 2021, according to the World Bank are projected to rise by 2.6 per cent. This will be aided by upgraded anticipation for growth in high-income countries.

For the time being, the World Bank has indicated dismay, observing that data on remittance flows to sub-Saharan Africa is scanty and dissimilar. This is as result of some countries still using the outmoded Fourth IMF Balance of Payments Manual instead of the Sixth. Others do not record data at all.

The change from informal to formal channels is due to the shutting down of borders according to the World Bank. This explains in part the rise in the volume of remittances recorded by central banks, despite numerous obstacles, which make sending money costly.

According to the World Bank, sub-Saharan Africa remains the most costly zone to send money to, where sending $200 costs an average of 8.2 per cent.

Globally, the World Bank said, despite Covid-19 disruptions, remittance flows remained strong in 2020. It only recorded a minor decrease than formerly predicted.
Remittances to low- and middle-income countries arrived at $540b in 2020, just 1.6 per cent below the 2019 total of $548b.

The fall is the second after the one that happened during theglobal financial crisis in 2009 where a 4.8 per cent fall was registered.
This was also far lower than the fall in Foreign Direct Investment flows to low- and middle-income countries, which, excluding flows to China, fell by over 30 per cent in 2020.

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