Ugandans living in the diaspora have been asked to transform their remittances into foreign direct investments (FDI) as a way of building their country and also get a good return on investment.
According to Bank of Uganda (BoU) remittances coming into the country are now over $1 billion (Shs3.6 trillion), which is way more than the $600 million (Shs2.1 trillion) official donor aid received in a year.
Experts say if organised well, Uganda’s remittances which have been growing at 21 per cent for the last five years will grow further and contribute immensely to the country’s economic development.
Speaking to Ugandans living in the diaspora at their annual Business Breakfast in Kampala last week, the BoU deputy executive director in charge of financial market development, Mr Arnold Babugwagye, said: “The diaspora from Uganda have a special attachment to their country that is why we have seen their remittances grow for the last five years at about 21 per cent.”
A survey done in 2015 showed that 80 per cent of the remittances coming into Uganda go into consumption. This has had an impact on poverty reduction especially at the household level but beyond that there is no significant impact.
“Policy makers should look through this because there is a lot of money which comes into the country but it remains at the household level,” Mr Babugwagye shared.
Experts say that if the $1 billion was changed into FDI, it would facilitate some of the government major infrastructure projects. A case in point is the renovation of the Entebbe International Airport which is costing government about $200 million (Shs726 billion). Another is the approximate figure of $400 million (1.4 trillion) being spent on the Entebbe Express Highway.
Mr Babugwagye said that if investment products for the Ugandan diaspora are set up then the country would be able to raise more than $1 billion currently remitted into the country.
Mr Ronnie Mayanja, a Ugandan living and working in the US, sharing his views on investing back home, said: “This is the way for us. We are not going to live in the diaspora forever. This is the time to rethink investing for our retirement, our families and the country at large.”
BoU is developing a product to address this, coming up with infrastructure to enable the transformation of these remittances into FDI.
“We are developing policies and infrastructure to see that the remittances are put to developmental use. But we need to see activities of the diaspora community,” Mr Babugwagye said.