- Title: VARIOUS: Growth in remittances to Africa hit hard by the financial crisis
- Date: 28th March 2009
- Summary: KAMPALA, UGANDA (MARCH 27, 2009) (REUTERS) VARIOUS OF ON GOING CONSTRUCTION IN KAMPALA'S CAPITAL (6 SHOTS) KESINGTON HOUSING ESTATE GENERAL MANAGER WORKING IN HER OFFICE (SOUNDBITE) (English) OF GENERAL MANAGER KESINGTON ESTATES UGANDA NAKKU SENKETTO SAYING "What I can tell you December, this past December 2008, we were expecting a lot of people coming in from the diaspora, coming in from the US, coming in from the UK, like they have done in the past, because usually you know December is a very busy month for Ugandans leaving out of Uganda but this year we didn't get the pool that we had anticipated to get, so in that regard that is some kind of indicator showing that they are in a kind of tight spot in the US and the UK." VARIOUS OF COMPLETE HOUSES AWAITING PURCHASE AT KESINGTON ESTATE VARIOUS OF EXTERIORS OF BANK OF UGANDA (2 SHOTS) SOUND BITE (English) OF THE EXECUTIVE DIRECTOR OF RESEARCH IN BANK OF UGANDA DR DAVID ASIIMWE SAYING "We expect that the flow of remittances will continue to come into this country, the overall volume may slow down in line with the recession but the extend of the fear of this reduction may not be as high as it may have been magnified" VARIOUS OF KAMPALA STREETS
- Embargoed: 12th April 2009 13:00
- Keywords:
- Topics: Finance
- Reuters ID: LVAM1H29WLXNVWNVVLTBUOEQ82M
- Story Text: Remittances, which had been booming as Africans in the diaspora invested in their homelands and helped relatives, drop with the financial crisis, affecting millions of Africans and hitting growth rates on the continent.
The skyline of Uganda is changing fast. The country's growth rates have been impressive for most of this decade and investment in property has led to a property boom.
While growth rates in Uganda are expected to remain well above 5 percent for 2009, the construction sector has recently been hit by an unexpected crisis.... money that had been flooding in from expatriates has suddenly dried up.
Coins still clank softly and Ugandan shillings still shuffle their way through counting machines at a foreign exchange bureau in downtown Kampala but the cash sent from abroad via this bureau is down by more than half, to about 35,000 US dollars per day.
Worse, the holiday season rush of expatriates back to Uganda did not materialise at the end of 2008.
"What I can tell you December, this past December 2008, we were expecting a lot of people coming in from the diaspora, coming in from the US, coming in from the UK, like they have done in the past, because usually you know December is a very busy month for Ugandans living out of Uganda but this year we didn't get the pool that we had anticipated to get, so in that regard that is some kind of indicator showing that they are in a kind of tight spot in the US and the UK," said Kesington Estates general manager Nakku Senketto.
Though it is too early to quantify the impact across Africa, anecdotal evidence from most bureaus in Uganda and elsewhere show some are already feeling the impact of less money coming in from the 30 million of so Africans living abroad.
"We expect that the flow of remittances will continue to come into this country, the overall volume may slow down in line with the recession but the extend of the fear of this reduction may not be as high as it may have been magnified," said executive director of research at the Bank of Uganda, David Asiimwe.
Though traditionally resilient even at times of crisis, remittance flows are bound to suffer if Africans working abroad have to tighten their belts or lose their jobs.
Some families abroad have already warned of less cash.
Even in the normally bustling city of Djibouti, a crossroads for trade between Africa, the Gulf, the Middle East and Europe, a recent drying up of remittances has been all too clear.
"This economic crises has reached everyone in the world, and is reducing peoples' incomes. This has had a big impact on people receiving money from their relatives in overseas. For example, if the person used to send his family 200 US dollars, today he can send 100 US dollars so this effects the flow of money transfers that families depend on," said Mohammed Ahmed, a manager at Mustaqbal Money Transfer Agency in Djibouti.
In Somalia, affected by years of civil war, the impact is even more striking. Xamda Ibrahim who lives in Bosaso, in the breakaway Somali republic of Puntland, relies almost entirely on remittances. Recently, they dried up.
"Really, this affected us very deeply, we have not received the money that we should have been sent from abroad, for two months. This is as result of our relatives losing their jobs in the economic crisis. We hope that something can change."
Remittances to Africa are worth 40 billion US dollars a year according to the United Nations. There are no figures yet available on how badly this amount has been affected. There is no denying, however, that remittances are an early casualty of the global financial crisis.
That could deliver a heavy blow to parts of Africa at a time the continent had been enjoying its fastest growth in decades -- an annual average of over 6 percent for the past five years.
For the continent as a whole, remittances are estimated to account for about 2 percent of gross domestic product. However, tourism, remittances, aid and foreign investment may all suffer from the crisis.
A heavy blow for some countries could also come from substantial falls in the prices of export commodities because of falling global demand.
The financial crisis has added to an already tough situation for African consumers, hit hard by fuel and food prices rises and the recent fall in oil prices has not yet translated into cheaper prices for consumers.
For poorer Africans, though, it just means more uncertainty in already precarious times. - Copyright Holder: REUTERS
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