EAC diaspora remittances soar to a record $9.3 billion

Arusha. Remittances from the East African diaspora soared to a record $9.3 billion in 2022 despite the high cost of funds transfer.

This is according to the World Bank which says remittances are now one of the largest sources of external financing for the region.

The remittances to the East African Community (EAC) partner states stood at $ 5.4 billion in 2017, jumping to $9.3 billion in 2022.

Despite the rosy picture, the Bretton Woods institution wants the region to develop mechanisms that will ease the cost of transfer of the funds.

Reduction of the cost, it says according to a dispatch from the EAC secretariat, would boost the partner states' economies.

Diaspora remittance is money sent by a person in a foreign land to his or her home country and has been increasing with citizens relocating abroad.

Due to the huge sums involved, remittances are now being recognised as an important contributor to the country’s growth and development.

"The current information on remittances from the World Bank indicates that the partner states received a combined $9.3billion in 2022", the EAC statement said.

Kenya, the largest economy in the region, has been leading in the diaspora remittances compared to other states in the union.

In 2021, the Kenyan diaspora remittance stood at $3.718 billion, while remittances from Uganda stood at $599.3 million.

The inflow of funds from the Tanzania diaspora in the same year was $569.5 million while Rwanda diaspora remitted $246 million.   

Business analysts at the EAC say the diaspora remittances have become "the largest source of external financing for the region".

The remittances have outpaced the Foreign Direct Investments (FDIs) the region enjoyed from multinational lenders in recent years.

The EAC announced early last year that it would lay ground for increased and formalized remittances from the Diaspora community.

Through this, communication links would be enhanced with the dollar-rich East Africans living abroad for the scheme.

An EAC Diaspora Policy and Plan of Action is also being mulled with the support of the International Organization for Migration (IOM).

It includes assessing Diaspora-related information and proposing the ideal data sharing among the key stakeholders.

In addition, the EAC is consulting with partner states and other partners on contributions from the Diaspora.

The revelation on increased diaspora fund inflows was made here on Tuesday as the EAC approved the Labour Migration Policy.

The policy aims to strengthen labour migration governance and maximise the benefits accruing from labour migration such as remittances by migrant workers.

Also targeted is protection and empowerment of migrant workers and mutual recognition of academic and professional qualifications.

Its implementation Plan spans from 2025-2030 with key priority areas being access to social protection and social security benefits, among others.

Other priorities are recognition of skills, promotion of fair recruitment practices and labour market information systems.

The policy requires the EAC partner states to put in place robust efforts to recognize, certify, and qualify skills acquired through experiential learning.

However, a notable gap remains at the EAC level where there is currently no specific mechanism for the recognition of such skills.

The gap underlines the urgent need to integrate skill recognition components into the ongoing development of frameworks across labour, education, vocational training, and skills development sectors.

The policy also takes cognisance of the fact that remittances by migrant workers is not explicitly addressed in the EAC legal and regulatory provisions.

This, the EAC technocrats, stress, calls for the need to develop "appropriate mechanisms for migrant workers engagement" in regional integration efforts.

The Directors of Labour and Employment from the partner states, who met in Burundi recently, approved the policy in question and its legal framework.

The idea to develop was proposed by the labour migration experts way back in 2013, according to the EAC director of social services Irene Kisaka.

It was crafted with the support of the African Union (AU) and was endorsed by the regional ministers for Labour and Employment in October 2021.

"The policy is not a legal instrument with a legal binding force but would serve as a guiding document to partner states with similar policies to align them with regional standards," Dr. Kisaka said.