Govt Turns to Nkuba Kyeyo Remittances as Donors Cut Aid

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In short
Government is looking to remittances from Ugandans working abroad to cushion impacts of aid cuts by the country’s major donors over grand corruption.

Government is looking to remittances from Ugandans working abroad to cushion impacts of aid cuts by the country’s major donors over grand corruption.
Dr Adam Mugume, the Bank of Uganda executive director in charge of research, told journalists in Kampala Tuesday that they forecast at least 700 million dollars in remittances from Ugandans abroad, locally known as nkuba-kyeyo.
The 700 million dollars is equivalent to about 1.8 trillion shillings that is about 20 percent of the national budget.
Donors who have announced aid cuts to Uganda are the European Union, the World Bank and European countries United Kingdom, Germany, Austria, Ireland, Norway, Belgium and Sweden.
Mugume said the 700 million dollars is actually a decline from the earlier forecast of 800 million. He said the fall in remittances is expected to be between 100 and 150 million dollars mainly due to economic slowdown in South Sudan and some European countries.
He said the small fall in remittance is due to the fact that remittances from a number of countries like South Africa, Canada and United States have improved, adding that many Ugandans in these countries are professionals in stable employment.

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Mugume said this Christmas season they expect at least 60 percent of remittances from abroad, totaling to about 420 million dollars. He said this would cushion the 300-million-dollar gap created by donor aid cuts.
Mugume pointed out that almost 80 percent of the 700-million-dollar remittances, that is about 560 million dollars, go for consumption with the remainder going to investments.
However, Mugume cautions that the government should not put its entire hope in the remittances. He suggests that the best option would be to rationalize the resources to ensure that critical sectors are not bogged down in order not to derail the economy.
He said that can be done by shifting resources from less critical areas to critical ones like health, education and infrastructure.
According to Mugume, the government has given notice of more borrowing from the public to fill the gaps left by the donor aid cuts. Already the government has borrowed 225 billion shillings from the public in line with requirements of the 2012/2013 budget.
According to figures from United Nations Conference on Trade and Development report on remittances for 2012, while remittances to Uganda are projected to decline, in Kenya remittances have increased by 10 percent from 800 million dollars in 2011 to over one billion dollars today.


About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.

In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.

I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."