Revealed: How remittances are set to suffer due to virus
Dar es Salaam. Money being sent home by Tanzanians living abroad is expected to fall as World Bank projects a global decline in remittances by about 20 per cent in 2020 due to the economic crisis caused by the Covid-19 pandemic and the shutdowns of institutions.
This translates that Tanzania, being one of the least remitted countries in East Africa, would be nevertheless still hit as the world remittances fall sharply, according World Bank.
The global lender says the fall would be the sharpest in recent history largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country.
According to the World Bank figures, Tanzania recent remittances stood at $430 million, an increase of only $25 million on the previous year. The sum represents 0.8 per cent of its GDP.
Further, the data by World Bank shows that in 2015 Tanzania received a total of $390 million, almost ten times the amount received in 2010.
For Kenya, they rose in 2018 to $2.72 billion (up from $1.96 billion in 2017) - equivalent to over three per cent of Kenya’s GDP whereas in Uganda, the remittances rose to $1.24 billion in 2018 (up from $1.17 billion in 2017) – and equivalent to 4.5 per cent of the country’s GDP.
Whereas in April 2018, the Ministry of Foreign Affairs and East African Cooperation told Parliament that Tanzanians living abroad send home an average of $456.5 million (about Sh1.03 trillion) annually, adding that a total of $2.283 billion (Sh5.2 trillion) was remitted between 2013 and 2017.
Evidence suggests that diaspora play a critical role in supporting sustainable development by transferring resources, knowledge, and ideas back to their home countries, and in integrating their countries of origin into the global economy.
However, Dr Mussa Iddi Hamisi, an economist from the University of Dar es Salaam (UDSM) told The Citizen that for historical reasons it may well be the case that Tanzania has a smaller diaspora, “but times have moved on, Tanzanians in diaspora are steadily increasing in number and are keen to send money back home.”
A lecturer in Kenya who spoke to The Citizen, Prof Ibrahim Kalokola, says he was used to sending money to his family in Tanzania, however, due to the Covid-19 pandemic his source of income has been affected after university closure.
Prof Kalokola, a part-time lecturer at the University of Nairobi-Kenya says, “Our country was in efforts to see more inflows coming back home. I was personally informed by the embassy here on the arrangements. Now the economy is going to suffer from every corner because of Covid-19 pandemic.”
“We will have to wait until the virus has cleared. I do not send money home as I used to do simply because my children in Dar es Salaam are not in school. The little money I have here can only support me,” he said.
According to the World Bank, remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 percent to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households.
A fall in remittances affect families’ ability to spend on these areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by Covid-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass.
Remittances to Sub-Saharan Africa registered a small decline of 0.5 percent to $48 billion in 2019. Due to the Covid-19 crisis, remittance flows to the region are expected to decline by 23.1 percent to reach $37 billion in 2020, while a recovery of 4 percent is expected in 2021.
