Somalia Rising as Source of Remittances for Kenya and Uganda
In a significant development, Somalia is becoming an increasingly important source of remittances for neighbouring countries, Kenya and Uganda. This surge in financial inflows underscores the economic ties and the growing influence of the Somali economy in the East African region.
Data gathered from diplomatic missions in Mogadishu reveal that Somalia hosts more than 35,000 Ugandans, with daily remittances ranging between $50,000 and $60,000. This is in stark contrast to Kenyans, who send an astounding average of $500,000 million back home every day. The difference in remittance volumes highlights the varying levels of engagement and the types of services provided by nationals of these countries within Somalia.
Nathan Mugisha, Uganda’s Deputy Head of Mission in Somalia, emphasized the potential for even greater economic contributions. Mugisha pointed out the need to leverage the skills and opportunities present within Somalia, particularly in sectors such as agriculture, construction, and mining. According to him, with better organization, Ugandan workers could significantly increase their remittance contributions.
While Ugandans are making their mark, Kenyans are not far behind, offering highly skilled services across various sectors. Although not specified, it is understood that many Kenyans are engaged in corporate, humanitarian, and hotel roles, among others. Diplomatic sources indicate that over 30,000 Kenyans are currently employed in Somalia, a figure that is anticipated to increase fivefold over the next five years. This projected growth is largely attributed to Somalia’s recent entry into the East African Community, which ensures free movement of people within the member countries.
An interesting observation is that Somalia is yet to be featured in the Central Bank of Kenya’s report on remittances, which highlights the top sources of diaspora Kenyans’ money transfers back home. This omission might change in the future given the increasing economic interactions between Somalia and Kenya.
On the Ugandan front, Robert Mugimba, Uganda’s Counsellor at the Embassy, provided insights into the significant role Somalia is playing as a destination for Ugandan labour exports. According to Mugimba, with 35,000 Ugandan workers, Somalia now ranks second only to Saudi Arabia in terms of overseas employment for Ugandans. This rise in numbers has been particularly steep in the nearly two years following a joint permanent commission between Uganda and Somalia in August 2022, which led to the signing of a Memorandum of Understanding focused on trade, diplomacy, and labour issues.
This bilateral agreement is not only ensuring the legal and streamlined employment of Ugandans in Somalia but also underscores the deepening economic and diplomatic ties between the two nations. The agreement is part of a broader strategy to enhance collaboration and ensure mutual benefits from the economic opportunities present in Somalia.
As Somalia continues to establish itself as a key source of remittances for Kenya and Uganda, it is clear that the business and employment landscapes within the Horn of Africa are evolving. These developments not only benefit the individual workers and their families through increased remittances but also strengthen the economic ties and cooperation within the region. The upward trend in remittances is a testament to the growing importance of Somalia in the East African economy, signaling a bright future for intra-regional trade and employment.
