Why Tanzania is behind in East Africa remittances

Dar es Salaam. Citizenship status, policies and mechanisms to recognise actual dollars sent home by Tanzanians in the Diaspora were mentioned as some of the setbacks which cause Tanzania to record low remittances from the Diaspora compared to other countries in the East African region.

Tanzania’s inbound remittances stood at about $403 million (Sh927.1 billion) in 2019, which is lower than Kenya’s $2.7 billion and Uganda’s $1.2 billion in 2019.

Speaking to The Citizen in separate interviews, the Diaspora representative and experts said there is no single hurdle to the slowdown of dollar inflows, and called for collaborative efforts to unlock the potentials.

The Tanzania Diaspora Hub (TDH) chairman, Mr Nassor Basalama, said there are still hiccups in the mechanisms that are used to record the amount of Tanzania remittances, “resulting in incorrect tabling.”

He said there is also an issue with the members of the Diaspora who use informal means to send money back home.

“That is why, as TDH, we held a meeting with some financial institutions on how to reduce rates on credits from the Diaspora, as well as increase awareness on the use of proper and ways of transactions,” he said - adding that the Hub has also been promoting investment opportunities for Tanzanians in their homeland, which would boost remittances.

“We realise that there are a lot of funds which go to family and friends.

“If we direct those into investments, it would help in appreciating Diaspora contribution to the economy,” he said.

Prof Leonard Mughor - who lives in the US, and is TDH’s treasurer - said having good investment policies and a friendly business environment would influence more Tanzanians in the Diaspora to invest their money at home.

“However, the situation is improving. The appetite is high and more people want to invest at home,” said Prof Mughor.

Economists said that the country’s Diaspora remittances have remained low compared to neighbouring countries because Tanzania has not allowed dual citizenship - unlike some other countries.

A University of Dar es Salaam (UDSM) lecturer, Dr Abel Kinyondo, said Tanzania continues to embrace outdated beliefs that if it allows dual citizenship, its people will be inveigled into causing harm to the country by other nations.

“Kenya allowed dual citizenship that has benefited the country tremendously through investments and other funds that are brought into their country,” he said.

In view of that, he said, it was high time that Tanzania reached the point where other countries are currently using to allow residence access that gives an individual all the rights as a citizen.

According to him, if Tanzania allowed its citizens to access residence permits, they would be bringing more money back home. He said Diaspora remittances are an important part of the GDP which brings back to the country foreign currency and helps to fill the investments gap.

“The country can also use its own people to invest in major projects if either dual citizenship or residence permits are allowed,” he said.

For his part, an independent financial analyst, Christopher Makombe, said Kenya became a capitalist country a long time ago - unlike Tanzania and,therefore the number of its citizens in the Diaspora is huge compared to Tanzania’s.

“At present, though, we don’t have the exact data. But, there are more Kenyans in the Diaspora with good jobs and salaries - unlike Tanzania. Therefore, automatically, the money they bring home is also in large sums,” he said.

Further, he noted that Kenya reviewed its constitution to allow dual citizenship that has allowed its citizens to invest back home and send money because they know they are allowed to own their assets - unlike in Tanzania.

He said the government should encourage more Tanzanians to take advantage of overseas employment opportunities in order to increase foreign remittances which will further help in improving the economy and stability of the Tanzania shilling

“There is a need to review the law and in that way the remittances will increase and help grow the economy,” he said.

The chief executive officer of NALA - an application which allows the Diaspora in the UK to send money to Tanzania, Kenya, Uganda and Ghana instantly - Mr Benjamin Fernandes, said most of his customers are Kenyans.

Mr Fernandes agreed that the decision not to allow dual nationality is one of the things pulling back Diaspora remittances into Tanzania.

Same for the TDH’s government relations officer, Mr Norman Jasson, who said that there is also a big challenge when it comes to opening a bank account for those Tanzanians who have changed their citizenship to a foreign one - hence making it hard to access the financial services.