Business down as remittances fall
Mar 04, 2009
Contrary to earlier perceptions that Uganda was cushioned from the effects of the global crunch, those depending on remittances from abroad are already feeling the squeeze.
By Titus Kakembo and Agencies
Contrary to earlier perceptions that Uganda was cushioned from the effects of the global crunch, those depending on remittances from abroad are already feeling the squeeze.
The World Bank says remittances from the Gulf Arab region, the lifeblood for millions in the developing world, could decline by 9% in nominal dollar terms this year, compared with a rise of 38% last year. Global remittance flows stood at $283b last year, up 7% from the year before.
In the last budget, remittances from Ugandans working abroad were estimated at $1,392m in the financial year 2007/08 up from $646m in the financial year 2006/07.
Jacinta Nakato, for the past five years has been relying on her son for up-keep and school fees. “Since January, even the calls are rare. My son says things are hard in the UK. He tells me to be more financially disciplined,†narrates Nakato, 56, in her modest Bombo homestead. She says he used to send 300 pound sterling (Sh1.2m) per month. But in January, he sent only sh500, 000.
Salabed Branch manager, Nasser Batambuze, on William Street said, “Ugandans in the diaspora did not send back as much money as they used to between the Christmas season. Unfortunately, the price of the US dollar and Pound Sterling rose in December, instead of falling as has been the trend.â€
Salabed stores in Old Kampala had used computers, bales of clothes/shoes, refrigerators and electronics dominating the items being sent back home.
But the cargo manager, Hussein Juma, says what is being handled now was sent last year by ship and it will be in March when they would be able to tell whether shipping volumes have dropped.
“However, the cargo delivered by air remains constant at 1.5 tonnes a month. And it peaks to between 2.5 tonnes and three tonnes. The stuff that comes by air is often wedding, graduation and other ceremonial items,†says Hussein.
Meanwhile, trade with international financial institutions is being regarded with suspicion. Sanyu Hamida on Luwuum Street is advising her friends abroad to trade off the shares they bought on the stock exchange in 2007 because they have since plummeted to half the issue price.
In town, Victoria Tavern, on Kampala Road, a popular hang out for Kyeyo returnees, has closed. A returnee, Zostin Tumusiime, author and investor in a stationary business in Kabalagala, closed business and opted to bounce back to journalism. Reliable sources in UK say there are Ugandans opting to return home as their earnings can no longer meet their needs.
A freelance scribe, Jerry Mulumba, says unlike in the past, many applicants are put on a waiting list and sent away. He says since the cost of living is now too high, many Ugandans would be willinglly to return home given the 3,000 pound sterling previously offered by the UK government, to any voluntary illegal immigrant going back home.
However, UK-based lawyer, Magomu Mashate, says detention centres are overwhelmed with Ugandans apprehended for illegal stay. He said efforts to lure them to return home are futile as some of them do not have skills to market in the job market once they return. “Some are afraid of returning bare handed. They would rather languish in custody and tussle it out legally,†said Mashate.
Meanwhile, in Dubai, Shalu, a 33-year-old Indian, paid 50,000 Indian rupees ($1,000) to an agency, which shipped him to a construction job in Dubai on what was to be a three-year contract. Last December, he was laid off after just one year. His company told him and about 250 other workers the work had dried up.
As signs of a deep downturn in the Gulf states’ once-buoyant property market multiply, migrant workers who aren't forced to return are having problems sending money home, and their declining remittances may be a significant drag on the economies of most recipient countries in Africa and south Asia.
A lavish trade and tourism hub in the United Arab Emirates, Dubai, is a prime destination for unskilled workers, many of whom spend hours on dusty construction sites, live in cramped desert labour camps and earn about 1,500 dirhams ($408.4) a month.
There is no current official data on the number of migrants but Human Rights Watch estimates there are three million from India, Pakistan and Bangladesh in the Gulf Arab state, with the majority in the construction sector.
The labourers, mostly from south Asia, swarm over building sites for landmarks such as the Burj Dubai, the tallest building in the world, and Dubai's seemingly endless high-rises.
In return, the pay offers a better standard of living for families back home or a chance to put away savings. Workers in the Gulf Arab region sent 21% of total global remittances to south Asia last year, with their funds accounting for 63% of inflows to Bangladesh and 52% of funds to Pakistan. “There has been a fall in the number of migrant Indians employed abroad,†said Anshuman Jaswal, an analyst at research firm Celent in Bangalore.
He said remittances will remain depressed through 2009 and early 2010, putting pressure on the Indian economy and making it more difficult for it to achieve growth targets.
Contrary to earlier perceptions that Uganda was cushioned from the effects of the global crunch, those depending on remittances from abroad are already feeling the squeeze.
The World Bank says remittances from the Gulf Arab region, the lifeblood for millions in the developing world, could decline by 9% in nominal dollar terms this year, compared with a rise of 38% last year. Global remittance flows stood at $283b last year, up 7% from the year before.
In the last budget, remittances from Ugandans working abroad were estimated at $1,392m in the financial year 2007/08 up from $646m in the financial year 2006/07.
Jacinta Nakato, for the past five years has been relying on her son for up-keep and school fees. “Since January, even the calls are rare. My son says things are hard in the UK. He tells me to be more financially disciplined,†narrates Nakato, 56, in her modest Bombo homestead. She says he used to send 300 pound sterling (Sh1.2m) per month. But in January, he sent only sh500, 000.
Salabed Branch manager, Nasser Batambuze, on William Street said, “Ugandans in the diaspora did not send back as much money as they used to between the Christmas season. Unfortunately, the price of the US dollar and Pound Sterling rose in December, instead of falling as has been the trend.â€
Salabed stores in Old Kampala had used computers, bales of clothes/shoes, refrigerators and electronics dominating the items being sent back home.
But the cargo manager, Hussein Juma, says what is being handled now was sent last year by ship and it will be in March when they would be able to tell whether shipping volumes have dropped.
“However, the cargo delivered by air remains constant at 1.5 tonnes a month. And it peaks to between 2.5 tonnes and three tonnes. The stuff that comes by air is often wedding, graduation and other ceremonial items,†says Hussein.
Meanwhile, trade with international financial institutions is being regarded with suspicion. Sanyu Hamida on Luwuum Street is advising her friends abroad to trade off the shares they bought on the stock exchange in 2007 because they have since plummeted to half the issue price.
In town, Victoria Tavern, on Kampala Road, a popular hang out for Kyeyo returnees, has closed. A returnee, Zostin Tumusiime, author and investor in a stationary business in Kabalagala, closed business and opted to bounce back to journalism. Reliable sources in UK say there are Ugandans opting to return home as their earnings can no longer meet their needs.
A freelance scribe, Jerry Mulumba, says unlike in the past, many applicants are put on a waiting list and sent away. He says since the cost of living is now too high, many Ugandans would be willinglly to return home given the 3,000 pound sterling previously offered by the UK government, to any voluntary illegal immigrant going back home.
However, UK-based lawyer, Magomu Mashate, says detention centres are overwhelmed with Ugandans apprehended for illegal stay. He said efforts to lure them to return home are futile as some of them do not have skills to market in the job market once they return. “Some are afraid of returning bare handed. They would rather languish in custody and tussle it out legally,†said Mashate.
Meanwhile, in Dubai, Shalu, a 33-year-old Indian, paid 50,000 Indian rupees ($1,000) to an agency, which shipped him to a construction job in Dubai on what was to be a three-year contract. Last December, he was laid off after just one year. His company told him and about 250 other workers the work had dried up.
As signs of a deep downturn in the Gulf states’ once-buoyant property market multiply, migrant workers who aren't forced to return are having problems sending money home, and their declining remittances may be a significant drag on the economies of most recipient countries in Africa and south Asia.
A lavish trade and tourism hub in the United Arab Emirates, Dubai, is a prime destination for unskilled workers, many of whom spend hours on dusty construction sites, live in cramped desert labour camps and earn about 1,500 dirhams ($408.4) a month.
There is no current official data on the number of migrants but Human Rights Watch estimates there are three million from India, Pakistan and Bangladesh in the Gulf Arab state, with the majority in the construction sector.
The labourers, mostly from south Asia, swarm over building sites for landmarks such as the Burj Dubai, the tallest building in the world, and Dubai's seemingly endless high-rises.
In return, the pay offers a better standard of living for families back home or a chance to put away savings. Workers in the Gulf Arab region sent 21% of total global remittances to south Asia last year, with their funds accounting for 63% of inflows to Bangladesh and 52% of funds to Pakistan. “There has been a fall in the number of migrant Indians employed abroad,†said Anshuman Jaswal, an analyst at research firm Celent in Bangalore.
He said remittances will remain depressed through 2009 and early 2010, putting pressure on the Indian economy and making it more difficult for it to achieve growth targets.