Growing as a remittance source for Kenya and Uganda is Somalia

According to diplomatic sources, Somalia has become a new source of remittances for Kenya and Uganda, amounting to $180 million and $21.9 million annually, respectively.

Data from the diplomatic missions in Mogadishu indicates that around 35,000 Ugandans are in Somalia, sending out between $50,000 and $60,000 daily, while Kenyans send out an average of $500,000 million daily.

In order to benefit more from this economy, Nathan Mugisha, Uganda’s Deputy Head of Mission in Somalia, told The EastAfrican in Mogadishu, “we just need to wake our people to add value to the skills that we want to market here.” “There are many opportunities in agriculture and skilled labor, particularly in the mining and construction industries.” All we need to do is organize better. Remittances from this mission range from $50,000 to $60,000 per day, but it is insignificant in comparison to the amount of money Kenyans send home.

Although the ambassador could not provide further details, reports suggest that the majority of Kenyans work in corporate, humanitarian, service, and hotel and hospitality management roles. Kenyans are known to provide highly skilled services. More than 30,000 Kenyans are reportedly employed in Somalia, according to diplomats, and this number is predicted to increase fivefold over the next five years as a result of the Horn of Africa country joining the East African Community, which ensures free movement of people within the bloc.

The most recent Central Bank of Kenya report on remittances for the year ended March 2024 does not include Somalia. Instead, it includes Tanzania, Uganda, South Africa, Nigeria, South Sudan, Zambia, Ivory Coast, Egypt, and Malawi as the top countries from which Kenyans living abroad send money back to Kenya.

With 35,000 workers in Somalia, Uganda currently ranks second in the world for labor exports, behind Saudi Arabia, according to Robert Mugimba, Uganda’s Counsellor at the Embassy. The numbers have increased in almost two years following the establishment of a joint permanent commission between Uganda and Somalia in August 2022.

To help Ugandans who are finding work here, a bilateral labor agreement was recently inked as a follow-up to the Memorandum of Understanding on commerce, diplomacy, and negotiations that was signed in that joint permanent commission, he clarified.

The radical Al-Shabaab group, which conducts deadly bomb attacks in the capital and other towns using vehicle-borne improvised explosive devices and indirect mortar fire, is the main threat to Somalia’s ongoing civil war, which has been raging for decades.

Although others have moved further into the countryside in search of more chances and occasionally find themselves in precarious situations, East Africans looking for work in the country continue to be concerned about their safety, according to Ugandan embassy officials.

Only 6,000 Ugandan nationals are registered with the embassy in Somalia, according to Amb. Mugisha. “We have had challenges of Ugandans ringing us from Al-Shabaab-controlled areas,” he said.

The EastAfrican spoke with a few Kenyans and Ugandans working in Somalia’s hospitality sector, which they characterized as a “fragile sector” because most tourists are thought to be concerned about their security.

“Many guests come here and never leave the hotel or conference rooms to take advantage of everything the city has to offer. Their expenditure is restricted to the locations where they are staying or holding conferences. That affects the industry and the economy, a hotel employee said, requesting anonymity out of concern for their safety.

Other Ugandan natives work for private security companies, providing specialized guard, search and CCTV, and reconnaissance services for luxury hotels, retail establishments, car-rental agencies, diplomats’ homes, and humanitarian organizations. Based on reforms, debt cancellation, and increased remittance inflows, Somalia and its partners paint a positive image of the economy strengthening this year, with real GDP growth predicted to reach 3.7 percent, according to the International Monetary Fund.

Foreigners now have the freedom to fully own their investments, repatriate capital, and take advantage of full protection in the nation as the government has lifted certain investment screening regulations that prohibited the deployment of capital.

Somalia decided to implement the Investments and Investors Protection Law, 2023, in order to draw in foreign money, according to Prime Minister Hamza Abdi Barre, who also stated that trade and investment restrictions resulting from foreign investment regimes create output losses of almost two percent.

He claimed that despite its political and socioeconomic difficulties, Somalia has changed course and entered a new period centered on luring in foreign direct investment while organizing, uniting, and optimizing the country’s business environment and procedures.

Speaking on April 24, Mr. Barre formally opened the Invest Somalia Conference & Expo, which was put on by the Nation Media Group in association with the Somalia Investment Promotion Office and the Ministry of Planning, Investment, and Economic Development of Somalia.

According to the PM, his administration has strategies in place to quicken economic growth that are driven by the private sector and supported by the state.

“To protect our people, investments, and future from insecurity and political instability, my government did put together a comprehensive and sophisticated, transformative political and security program. These initiatives have yielded better results quickly, as vast tracts of land have been secured for the first time in thirty years. We have taken the path of decoupling, de-risking, and encouraging foreign investments in order to properly handle these geopolitical problems,” he stated.

He observed that Somalia was now telling its own positive and progressive story. Stephen Gitagama, chief executive of Nation Media Group, agreed, saying that African media should be the ones telling the continent’s story.

As an enterprise tasked with influencing society and sharing tales of triumph and transformation, the Nation Media Group has assumed the forefront in promoting the African narrative. We are here today as a voice of the people, for the people, stated Mr. Gitagama.

“Our mission to be a reliable partner to African democracies, a champion of the common person, a voice for the rule of law, and a steadfast advocate for human rights and free market economies is central to the values and the purpose of our founding. Being the biggest media company in East and Central Africa, we work hard to make sure that the goods and information we offer meet the demands of our diverse range of consumers. We thus take pride in having a portfolio that spans four nations and thirty content offerings. Our weekly regional newspaper, The EastAfrican, is distributed throughout East Africa and focuses on advancing regional integration via in-depth analyses of the most important political and economic problems of the day.

Mr. Gitagama praised Mogadishu for fostering a business-friendly environment, noting the creation of the Somalia Investment Promotion Office and the implementation of a tax structure that stimulates economic expansion and investment.

“The Anti-Terrorism Law, which aims to establish a legal framework empowering government security agencies in the fight against terrorism within Somalia, is set to stabilise the security landscape and incentivize foreign investments,” Mr. Gitagama stated. The law was passed by the Lower House of Parliament in 2023.

He characterized Somalia as emerging as a new area for investment and entrepreneurship and as resilient in the face of adversity.

“Somalia: The New Frontier for Entrepreneurship & Investment,” the conference’s subject, puts light on a country that, although frequently overshadowed by its troubled past, contains enormous promise for those with the courage to look behind the headlines, the speaker stated.

“Solidarity and instability have afflicted Somalia for decades, which has definitely impeded its economic development. But in the midst of these difficulties, a new story of hope and opportunity is emerging.

Somalia’s 2023 accession to the East African Community (EAC) created a plethora of trade and investment prospects for the area.

Being an EAC member gives it access to a wider market, opening up opportunities for international commerce and investment, as well as an 18 million strong market.

Somalia boasts a youthful population, a strategic position, and an abundance of natural resources, including fisheries and oil and gas. It has unrealized potential in industries including tourism, telecommunications, agriculture, and renewable energy.

Its lush land provides the perfect environment for farming, with the ability to feed both the local populace and the surrounding area.

With one of the longest coastlines in Africa, it offers potential for the growth of a prosperous maritime sector.