Private capital remittances sent by Rwandans in the diaspora to support their families have dropped, raising new fears about Rwanda’s economic prospects as consumer spending reduces.

“My son used to send me Rwf40,000 per month from France,” said Felestine Nsengiyumva, a widow who partly depends on her son’s income to support the family. “This money was enough for food, charcoal and house upkeep.

“However, he has halved the transfers.”

With only Rwf20,000 as her disposable income, Ms Nsengiyumva has been forced to reduce her budget, which has multiplier effect on the economy.

The fear is that, should the conscious spending by diaspora spread into the burgeoning real estate and property market, it will have an adverse effect on the entire economy.

Net diaspora remittance receipts captured by the National Bank of Rwanda (BNR) indicate that the country registered a Rwf11 billion shortfall in the fiscal year 2014/15 compared to the previous one.

The central bank report shows that the remittances dropped from about Rwf96 billion ($128.6 million) in the 2013/14 fiscal year to settle at Rwf85 billion ($113.6 million) by the end of 2014/15.

Louise Antoine Muhire, chief executive officer of Mergims, a mobile payment application developer that runs an electronic platform which allows migrant workers to transfer money to their home countries, said the drop in remittances was expected since European and American economies, where the Rwandan diaspora has not registered a strong growth for several years. His concerns were corroborated by bankers, who receive the remittances.

“I believe that that is because the remitters are under pressure to make ends meet in their countries of sojourn,” said Maurice Toroitich, managing director of KCB Rwanda. “Prospects for employment and regular income in Europe and America are much lower than prior to the global economic crisis.

“It also depends on why remittances were being made: If remittances were being made for investment purposes, then perhaps we are just going through a normal cool-off cycle, where people in the diaspora are now waiting to see if their prior investments are worthwhile before making further investments.”

A Rwandan diaspora meeting in Kigali cited the high cost of sending remittances as partly responsible for the drop.

It is against this backdrop that investment advisors say Rwandans the diaspora are better off investing their savings in East Africa as the region offers high returns on investment since the economies have remained resilient.

East Africa is the most attractive region to invest in, according to analysts, because of the diverse nature of its economy. West Africa is still commodity-driven, as well as Southern Africa excluding South Africa.

“If you look at returns over the past five years in Kenya, real estate and private equity have returned roughly 25-29 per cent; when you look at equities fixed income, they have returned roughly 10-12 per cent,” said Edwin H Dande, CEO of Cytonn Investments Management Ltd, on KFM radio in Kigali.