Measuring Workers’ Remittances

1. Measuring Workers’ Remittances Michael Atingi-Ego Bank of Uganda

2. Outline • Introduction • Measurements of Data on Migrants Remittances • Weaknesses in the Current Methodology • Way Forward

3. Introduction • Migrant remittances equivalent to 5% of GDP • Account of 50% of exports of goods • Largely spent on consumption, though investment is now picking up • Propensity to remit increasing on account of improving macro-economic environment, investment climate and political situation

4. Introduction • Seasonal • From SA, UK and USA • Outward remittances destined to China and India mainly • Accounts for about 3% of GDP • Commercial banks, Forex Bureaus, International Transfer Agencies, Informal Channels • TT, Money Orders, Drafts, Cash, in Kind

5. Measurement • Control total for both inflows and outflows • Subtraction of all identified inflows and outflows; • Residual is deemed private transfer inflows; • Private inflows sub-divided into migrant remittances and other private transfer inflows including NGO’s, insurance premiums etc

6. Measurement • Breakdown between migrant remittances and other private transfers is derived using ratios obtained from commercial banks monthly reports • Sometimes underestimated as transfer in kind is not included or overestimated when currency conversions take place in commercial banks (capital a/c liberalization)

7. Measurement • Assumption is that all FX inflows are converted into local currency • Outside FX authorized dealers e.g. informal channels and goods in kind excluded

8. Weaknesses in Current Methodology • Omission of transfer in kind and transfers in informal sector • Import financing does not provide for gifts or goods in kind • Agents involved in both domestic economy and non-resident agents in a sophisticated method of settlement. Imports vs. settlement in local currency

9. Weaknesses in Current Methodology • Does not provide any additional data for analytical purposes e.g. origin of transfers • Lack of migration statistics to identify whether Ugandans leaving the country are on a short or long term duration • ITRS systems could not be enforced because of lack of legal mandate

10. Way Forward • Use of National Household survey for the first time ever (2005) • Law in place to strengthen the use of ITRS • Licensing of private money transfer companies apart from the already existing authorized dealers - expected to lower costs and therefore improve on the data captured) • Enforcement mechanism for accurate data collection provided for in the law.

11. Thank You