Money sent by Ugandans living abroad will suffer a huge dent as many suffer job losses and pay cuts amidst the coronavirus pandemic crisis.
According to the World Bank estimates, money sent to Sub-Saharan Africa – where Uganda falls – will decline by 23.1 percent to USD 37 billion in 2020, down from USD 48 billion received in 2019. Uganda received about USD 1.2 billion (4.5 trillion Shillings) in 2019, according to Bank of Uganda estimates.
Going by World Bank estimates, it means Uganda will suffer a drop of up to 1 trillion Shillings in the diaspora remittances. The anticipated decline can be attributed to a combination of factors driven by the coronavirus outbreak in key destinations where African migrants reside including in the European Union, the United States, the Middle East, and China.
These countries have suffered unprecedented economic decline due to closures to stop the spread of the virus. Job losses, company closures, and wage cuts as companies struggle to survive have become a norm.
Globally, remittances are projected to decline sharply by about 20 percent in 2020 due to the economic crisis induced by the COVID-19 pandemic and shutdown. Remittances from people working abroad have been proven to fight poverty as recipients can pay fees, buy food and build decent accommodation.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass.
He added that “Remittances help families afford food, healthcare, and basic needs… we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”
World Remit, a money sending company, says about 90 per cent of Uganda’s transactions that go to mobile money in Uganda were for people in rural areas. It shows the village folks benefit hugely from their children abroad.