Remittances to Uganda by Ugandans living abroad dropped by more than $156m (Shs593b) between July 2017 and April 2018 on account of slowed growth from source countries.
Uganda’s daily tabloid the Daily monitor reports that According to data from Bank of Uganda, remittances declined to $944m (Shs3.5 trillion) down from $1.1b (Shs4.1 trillion) in the period under review.
The decline, according to Dr Adam Mugume, the BoU director for research, could have been a result of slowed growth in key source countries such as UK, South Africa and South Sudan.
“These have been the major sources. They have most of our professional people working there compared to [other countries], especially in East Africa,” he said.
The economic performance in both UK and South Africa has been weak while South Sudan continues to endure a recurrent civil war that has ravaged the country since 2014.
However, according to Dr Mugume, the country registered an increase in remittances from the Americas (US and Canada), although they were not enough to close the decline in the period under review.
Similarly, he said, the increasing number of workers in the Middle East is yet to impact remittance inflows due to the fact that majority of them are not employed as professionals.
According to Uganda Association of External Recruitment Agencies, there are more than 65,000 Ugandans working in the Middle East.
The reduction in remittances, according to Dr Fred Muhumuza, a lecturer at Makerere University, could explain the volatile nature of the shilling in the last two months.
The shilling has depreciated by about 3.8 per cent since January becoming the worst performing currency in East Africa.
“The decline [in remittances] might also affect price variations of basic commodities as it might influence inflationary pressures, ” Dr Muhumuza said.
Yesterday the shilling closed at Shs3,849, weakening further from Shs3,824 at the start of the week.
IMPACT ON SHILLING
The reduction in dollar inflows, according to experts, could be the reason for the current volatility of the shilling which has depreciated by about 3.8 per cent against the dollar since January.
The shilling continues to weaken due to high demand amid low dollar inflows. The unit yesterday closed at a new low of Shs3,849.
In the last three weeks it has breached key resistance levels and experts have predicted that the unit will hit the Shs4,000 mark before the end of the year if no urgent intervention is done.