Covid-19 knocked $200m off remittances last year

Remittances, according to data from Bank of Uganda, fell to $1.2b down from $ 1.4b during the period ended December 2020. PHOTO/FILE.

Summary

By MARTIN LUTHER OKETCH

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Remittances fell by $200m for the year ended December 2020, highlighting the impact of Covid-19 within and without Uganda. 

According to data from the Central Bank, Dr Adam Mugume, the Bank of Uganda executive director research, said remittances from abroad reduced to $1.2b down from $ 1.4b in the period ended December 2019.  

However, he did not explain the cause of the reduction but indications are that Covid-19 could have had a big impacting eating away $200m and slowing down one of Uganda largest foreign exchange sources.  

Remittances have been steadily growing over the past five years as Uganda increases its workforce abroad, especially in the Middle East, which in the last three years has overtaken other regions as Uganda’s largest foreign exchange sources.  

The Middle East alone has more than 150,000 immigrant workers from Uganda, however, majority are engaged in casual and homecare jobs. 
The World Bank said late last year that the Covid-19 crisis would eat into money migrant workers send home, leading to a decline of at least 14 per cent by the close of 2020. 

The decline, the World Bank said, will be sustained into 2021 with low and middle-income countries projected to experience a fall of 7.5 per cent or $470b within the period as a result of weak economic growth and employment levels in migrant-hosting countries, weak oil prices and depreciation of currencies in remittance source countries. 

“The impact of Covid-19 is pervasive when viewed through a migration lens as it affects migrants and their families who rely on remittances,” said Ms Mamta Murthi, the World Bank vice president for human development and chair of the migration steering group. 

Remittances are a source of external financing for low and middle income countries. 

In 2019, remittance inflows among low and middle income counties had touched a record high of $548b, which was larger than foreign direct investment inflows ($534b) and overseas development assistance ($166b). 

The gap between remittance inflows and foreign direct investment is expected to widen given that FDI is expected to decline sharply. In a brief authored by Mr Dilip Ratha, the head of Knomad, it was noted that “migrants are suffering greater health risks and unemployment during the Covid-19 crisis”, which weakens lifelines that depend on remittances. 

This year, it is expected, for the first time in recent history that the stock of migrants will decline with new migrations slowing while returnee are projected to increase. 

Returnee migrants have been reported in all parts of the world following the lifting of lockdowns. 

Rising unemployment in the face of tighter visa restrictions on migrants and refugees is expected to result in a further increase in return migrants. 

Supporting returnees 
According to Mr Michal Rutkowski, the World Bank director for social protection and jobs global practice, beyond humanitarian considerations, there is a strong case to support migrants who work with host communities on the frontline. 

These, he says, should be achieved with supportive policy responses by host countries, while origin or transit countries should consider measures to support migrants returning home.  

According to the World Bank migrant origin countries must find ways and programmes to support returnees resettle, find jobs or open up businesses. 
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