Uganda urged to unlock full potential of remittances with national policy

As remittance inflows continue to play an increasingly vital role in Uganda’s economy, players in the financial sector are calling for a comprehensive national policy and tax incentives to unlock their full development potential.

With over $1.4 billion (approximately UGX 5 trillion) sent home annually by Ugandans working abroad, the real figure could be significantly higher—if informal channels were accounted for.

At the Annual Bankers Conference in Kampala, organized by the Uganda Bankers Association (UBA), stakeholders urged government intervention to improve transparency, reduce remittance costs, and better safeguard the investments made through diaspora funds. The event, held under the theme “Harnessing the Potential and Maximising the Impact of Remittances on Development,” brought together regulators, banks, government ministries, and international financial service providers.

Wilbrod Owor, Executive Director of UBA, said formal remittance figures barely scratch the surface, pointing to a large chunk of informal transfers that go untracked due to a lack of supportive infrastructure and policy.

“If there’s a structured framework that protects both the money and the interests of the senders, we would not only see higher remittance figures but also more impactful investment outcomes,” he noted, calling for targeted tax breaks and risk protection mechanisms for diaspora-led investments.

Remittances: A Lifeline Beyond Numbers

Bank of Uganda Governor Michael Atingi-Ego described remittances as “lifelines” for millions of families and communities—not just simple financial transactions. In many developing countries, he said, remittance flows outstrip foreign direct investment and development aid, making them a cornerstone of national economic resilience.

“These transfers go beyond money—they address unemployment, reduce poverty, and enhance social welfare in migrant home countries,” he said. He added that the central bank is currently reviewing National Payment Systems Regulations to promote cross-border financial interoperability and reduce transfer costs.

“We’re encouraging commercial banks to invest in digital platforms that allow for cheaper, faster, and safer international money transfers. This is key to financial inclusion,” Atingi-Ego said.

Behind the Numbers: Stories of Risk and Frustration

Gender, Labour, and Social Development Minister Betty Amongi called for more research-based innovation to design financial products that truly address the needs of the diaspora. She cited a fact-finding mission to Dubai, where she discovered widespread use of informal and risky channels by Ugandan workers, often out of necessity or mistrust in formal systems.

“Many are discouraged by bad experiences—money diverted by relatives, low-quality real estate developments, or lack of legal recourse,” Amongi said. “Understanding the lived experiences of migrant workers is the first step in addressing the real barriers to formal remittance use.”

She emphasized that migration is both an economic opportunity and a necessity, and any national policy must reflect that dual reality.

Calls for Oversight and Quality Assurance

Julius Kakeeto, UBA Chairperson and CEO of PostBank, acknowledged concerns raised by diaspora investors, particularly around mismanaged investments and fraudulent property deals facilitated by unregulated actors.

He said UBA is working on quality assurance measures in collaboration with property developers and related service providers to ensure that diaspora funds—especially those used for real estate—are used responsibly.

“Member financial institutions are now taking deliberate steps to vet developers and introduce safeguards in mortgage financing to protect diaspora clients,” Kakeeto said.

Mastercard: Transparency and Trust Are Critical

Shehryar Ali, Senior Vice President at Mastercard, emphasized the need for transparency across the entire remittance value chain. According to him, most frustrations arise when senders and recipients are unclear about fees, timelines, and the exact amount expected at the destination.

“If we can offer clarity, security, and affordability, people will abandon informal channels. But this requires all actors—banks, telcos, fintechs, regulators—to work in sync,” Ali said.

Mastercard has been piloting programs in partnership with local banks and mobile money operators to build more accessible remittance platforms and educate migrant workers on safe financial practices.

What a National Policy Could Do

Experts argue that Uganda lacks a clear national remittance policy—one that integrates diaspora engagement, regulatory oversight, consumer protection, and financial literacy. Such a framework could include:

• Tax incentives for diaspora investments
• Legal support for dispute resolution
• Certification or vetting of developers and remittance service providers
• Digital infrastructure to track inflows and promote formal channels
• Diaspora bonds or investment vehicles to support national development

Currently, many migrant workers avoid banks due to high charges, complex procedures, or prior bad experiences. Yet, with a proactive approach, Uganda could significantly scale up remittance contributions to GDP while also improving livelihoods and development outcomes.

Looking Ahead

With the country’s remittance inflows projected to grow in tandem with global labor migration, policymakers are under pressure to move beyond rhetoric and develop practical, rights-based interventions. Stakeholders say a remittance policy backed by legislative reforms could unlock billions more and transform Uganda’s diaspora from distant senders into strategic development partners.

As the financial sector continues its push for reforms, one thing is clear: Uganda’s migration story is no longer just about departure—it’s about return, reinvestment, and reimagining what diaspora capital can build.