Banking industry stakeholders are calling for tax incentives and a comprehensive national policy on remittances to boost the inflows and enhance their potential impact on the economy. Uganda officially receives about $1.4 billion (approximately UGX 5.3 trillion) annually from Ugandans working abroad, according to 2023 figures by the Bank of Uganda. However, stakeholders say the actual amount is much higher as a significant portion of remittances flows through informal and often unregulated channels, making it unrecorded. Globally, the World Bank estimates that Sub-Saharan Africa loses nearly 10–15% of remittance inflows to informal systems due to high transfer costs and lack of transparency. Wilbrod Owor, the Executive Director of the Uganda Bankers Association (UBA), argues that a comprehensive policy that safeguards remittances and the interests of senders would increase inflows and ensure that these funds are used for more impactful investments. Speaking at the Annual Bankers Conference in Kampala, Owor said; “If there is a policy in place that protects the money and the interest of the senders, the figures will grow, but also the outcome of the investments from the money will be more meaningful.†The conference ran under the theme: ‘Harnessing the Potential and Maximising the Impact of Remittances on Development.’ Gender, Labour and Social Development Minister Betty Amongi urged financial institutions to invest in research-driven, human-centred innovations to design financial products that meet the real needs of migrants. “We must first understand why people go abroad. Migration is driven by both necessity and opportunity. If we design products that truly serve their needs, remittances will not only grow but create lasting impact,†she said. Amongi added that the actual remittance figures are much higher than reported, citing her personal experience during a fact-finding mission to Dubai in the United Arab Emirates, where she discovered that many Ugandans there rely on informal and often costly money transfer systems to send money home. Bank of Uganda Governor Michael Atingi-Ego described remittances as more than just financial transactions, saying they represent vital lifelines for families and communities. “Globally, remittances often surpass foreign direct investment and official development assistance, underscoring their profound importance in addressing employment challenges, poverty alleviation, enhancing social welfare, and building skills,†he said. He revealed that the Central Bank is reviewing National Payment Systems Regulations and also encouraging banks to invest in interoperable digital platforms to make cross-border transfers faster and cheaper. Currently, the cost of sending money to Sub-Saharan Africa is among the highest globally, averaging 8.4% per transaction compared to a global average of 6.2%. One of the main challenges for Ugandans in the diaspora is the mismanagement of remitted funds, particularly in real estate investments. Julius Kakeeto, the Chairperson of UBA, acknowledged complaints about property developers mishandling investments financed by UBA institutions. “We are taking measures to protect diaspora investments by ensuring stricter oversight on real estate projects financed through our mortgage products,†Kakeeto said.
From the private sector perspective, Shehryar Ali, a Senior Vice President at Mastercard, stressed the importance of transparency across the remittance value chain.
“Senders must know exactly how much the recipient will receive. We need collaboration among all actors – banks, regulators, and money transfer companies – to improve trust and reduce costs,†he said.
According to the World Bank, remittances account for about 3% of Uganda’s GDP and support millions of households by covering expenses such as education, healthcare, and small business investment.
Stakeholders at the conference noted that a comprehensive national remittance policy, tax incentives, and expanded digital infrastructure could help Uganda unlock an additional $500 million to $700 million in remittances annually, which would significantly buttress the country’s development agenda.
