Published On: Sat, Jul 8th, 2017

High Taxation on remittance hinders Diaspora Contribution -East Africa

Tanzania and Rwanda are the most expensive countries in the region to send money to from the United Kingdom, a position that has been hindering growth in diaspora remittances.

Tanzania is the second most expensive country to send money, with fees taking up to 16 per cent of the amount sent, while Rwanda charges 15 per cent as fees, according to non-profit organisation FSD Africa.

The cost in the two countries is higher than what South Sudan and Somalia charge and is more than double what is charged by Kenya, at 7 per cent. Uganda charges 9 per cent.

“While Tanzania is not considered a fragile and conflict-affected state, there would be benefits from lowering costs to this market. There were 39,000 Tanzanians living in the UK as at 2015,” notes FSD Africa.

“The high forex exchange margins when sending money to Rwanda are driven by volatility in the exchange rate,” adds FSD.

Cash sent back home by Africans working abroad has grown to be a key foreign currency earner.

In Kenya, diaspora remittances are the second highest forex earners, surpassing traditional sources such as tea and coffee.

Kenya received $422 million from the UK in 2015, making it the second highest recipient of cash from the UK in Africa after Nigeria. Uganda ranked fifth on the continent receiving $229 million, while Tanzania was tenth having received $55 million.

Kenya has ridden on mobile money technology to cut the cost of sending money to the country while also benefitting from the competition as remittance companies battled for market share.

Tanzania has this year recorded a sharp increase in remittances which has been attributed to mobile technology. Earlier last month, WorldRemit, a digital money transfer service, announced it is now recording 10,000 unique monthly transactions in the country, underlining the growth.

Kenya and Uganda has sought to lure its citizens abroad to send more money home by organizing annual conventions where companies showcase the various opportunities open to the diaspora community.

Tanzanians leaving abroad have complained in the past that they did not feel that their contribution in the economy was being appreciated.

Those leaving abroad have also been complaining of being conned by their relatives back at home. Cash sent for investment is diverted for household use with projects being abandoned.


Investment in Africa offer a better return than in Europe creating making it reasonable for Africans to invest back home. Most of those working abroad also have a desire to return back to their countries at some later stage making it important to settle up an alternative.

The East African

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High Taxation on remittance hinders Diaspora Contribution -East Africa
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