Remittances from Ugandans living abroad fell by 8.4 per cent last year, reflecting the effects of the economic slowdown in host countries. The major source areas of remittances to Uganda are Europe, Southern Africa, the USA and Canada, and until recently South Sudan.
The Bank of Uganda reports that remittances fell from $930 million in 2013 to $850 million — a development economists say could result in a short term reduction in capital investment in the country. The turnout represents a 15 per cent shortfall from the $1 billion projection for the year.
Adam Mugume, Bank of Uganda’s executive director for research, said only $237 million was remitted in December, a month that normally contributes 40 to 50 per cent of total remittances.
“The subdued growth in remittances reflects the weak economic environment in source countries like Europe and South Africa,” he said.
The World Bank’s senior economist for Uganda, Jean-Pascal Nguessa, said the reduction in private remittances into Uganda and other African countries could slow down poverty reduction and capital investments, which could translate into slower GDP growth rate.
Dr Nguessa said the slowdown in private remittances will affect household incomes in the short term, depress consumption of goods and services, investments in the construction sector and other related capital investments.
The World Bank said in its Global Economic Prospects 2015 report that with the global economy growing by an estimated 2.6 per cent in 2014, it is projected to expand by 3 per cent this year, 3.3 per cent in 2016 and 3.2 per cent in 2017.
The International Monetary Fund in its new World Economic Outlook 2015 said the global economy will expand by 3.5 per cent this year and 3.7 per cent in 2017.