Uganda's labour exports have become a significant source of foreign exchange, earning the country approximately $1.6 billion annually. According to Bank of Uganda Deputy Governor Professor Augustus Nuwagaba, this revenue stream is crucial to the country's external sector. The earnings support household spending, contribute to foreign exchange reserves, and strengthen the country's current account. Labour exports, alongside tourism, remittances, and merchandise exports, play a vital role in Uganda's economy.
The majority of Uganda's labour exports come from workers employed in the Middle East, with countries such as Saudi Arabia, the United Arab Emirates, and Qatar being popular destinations. Unskilled Ugandans working abroad send back around $900 million annually, while skilled professionals working in countries like the United States contribute approximately $700 million. These figures highlight the growing importance of Ugandans working abroad to the country's foreign exchange earnings.
Professor Nuwagaba emphasized that Uganda could earn significantly more from labour exports if workers acquired skills that enable them to compete for professional and managerial positions. He urged the government and stakeholders to strengthen vocational and professional training for Ugandans before they leave the country for employment. This would increase the chances of securing better-paying jobs and subsequently sending more money back home.
Tourism is another major source of foreign exchange for Uganda, with the country earning around $4 billion annually from foreign visitors, including tourists and investors. Nuwagaba attributed the growth of tourism and investment to the peace and security that the government has strengthened across the country. However, he noted that foreign exchange earnings from labour and tourism need to be matched by increased production and exports of goods and services.
Uganda faces pressure from a relatively narrow export base and a high import bill, resulting in a trade imbalance that contributes to pressure on the shilling. The shilling is currently trading at around 3,940 against the US dollar, compared to 3,740 previously. Nuwagaba emphasized the need for Uganda to increase domestic production and add value to agricultural and other products to expand its export base and reduce dependence on imports.
To achieve sustainable foreign exchange earnings and support the shilling, Nuwagaba encouraged Ugandans with substantial savings to invest in productive economic activities instead of keeping their money in bank accounts. He warned that depositors could lose part of their savings if a bank fails, noting that the Deposit Protection Fund of Uganda provides compensation of up to 10 million shillings to eligible depositors.
The Bank of Uganda will continue to support the government's Tenfold Growth Strategy towards 2040, which identifies industrialisation, tourism, information and communication technology, and commercial agriculture as drivers of economic transformation and export growth. By increasing productivity and value addition, Uganda aims to build sustainable foreign exchange earnings, support the shilling, and maintain economic growth.
Key points
- Uganda earns $1.6 billion annually from labour exports.
- Skilled workers can secure better-paying jobs, increasing the amount of money sent back home.
- Uganda needs to increase domestic production and add value to products to expand its export base.
