LSL can help mobilise the Ugandan diaspora via innovative financing for development

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Uganda borrows mostly to facilitate economic infrastructural development, largely from the International Monetary Fund, the World Bank, the African Development Bank, China Exim Bank and Japan.  World Bank (2013) data places Uganda’s current external debt at Ush3.7 trillion (USD4 billion)

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Uganda borrows mostly to facilitate economic infrastructural development, largely from the International Monetary Fund, the World Bank, the African Development Bank, China Exim Bank and Japan.  World Bank (2013) data places Uganda’s current external debt at Ush3.7 trillion (USD4 billion) while some statistics indicate that the country’s external and domestic debt is growing at 2 percentage points of GDP every year.

 

Experts argue that, as in the case of Ethiopia, which has used diaspora bonds to reduce the burden of external borrowing for its infrastructure projects since 2008, Uganda could use these bonds to ease the country’s heavy borrowing from external financial institutions.  However, Uganda’s plans for a diaspora bond will be delayed as they have have hit a snag due to the low level of awareness, says a Bank of Uganda (BoU) report. Arnold Bagubwagye, Assistant Director of Financial Markets at the BoU, told a recent dialogue on Diaspora Resource Mobilisation and Utilisation in Kampala that it may not be feasible to issue a diaspora bond independently, as there are concerns about the lack of critical mass to fully subscribe to this diaspora bond.

 

The Ugandan diaspora—a powerful resource

Ugandans in the diaspora are a powerful resource in the development of the economy through their annual remittances, currently rated at about USD900 million. BoU officials said that many Ugandans in the diaspora opt to invest back home by buying property and establishing small businesses.  A diaspora bond, regulated by a competent body, would spare Ugandans living abroad the trauma of the loss of their savings through fraudulent deals.

 

The Ugandan government is faced with the challenge of inadequate data on its nationals living abroad, such as their whereabouts, their earnings and their savings culture. Another challenge experienced is the diaspora’s difficulty in understanding some financial instruments like diaspora bonds.

 

BoU intends to attract the Ugandan diaspora to invest in ordinary government securities and a special channel is being developed for this.  “Once we attain a critical mass, then a full diaspora bond can be considered”, Mr. Bagubwagye added.

 

LSL World Initiative specialises in unlocking diaspora values through innovative financing

LSL World Initiative (LSL) is a global organisation specialising in innovative financing for development (IFD) and dedicated to the socio-economic empowerment of developing and emerging countries.

 

The World Bank defines innovative financing for development as mechanisms “that depart from traditional approaches to mobilizing development finance [---].  Innovative development finance therefore involves non-traditional applications of solidarity, PPP, and catalytic mechanisms that support fundraising […] engaging investors beyond the financial dimension of transactions, as partners and stakeholders in development; or deliver financial solutions to development problems on the ground” (World Bank 2009).

 

LSL’s innovative financing for development model focuses on unlocking the diaspora values through micro-surcharges on both the telecoms and financial services industry to spur economic growth and boost domestic revenues.  The organisation helps governments to identify new sources of revenue, including financial services, electronic tax collection, E-stamping and surcharges on remittances and provides assistance in managing, leveraging, unlocking and protecting these revenues through a multi-partnership approach.

 

The model could also benefit a country like Uganda, by contributing to the country’s goals and assisting it to create cost-effective, scalable and sustained solutions for its socio-economic problems.

 

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Uganda borrows mostly to facilitate economic infrastructural development, largely from the International Monetary Fund, the World Bank, the African Development Bank, China Exim Bank and Japan.  World Bank (2013) data places Uganda’s current external debt at Ush3.7 trillion (USD4 billion)

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Uganda borrows mostly to facilitate economic infrastructural development, largely from the International Monetary Fund, the World Bank, the African Development Bank, China Exim Bank and Japan.  World Bank (2013) data places Uganda’s current external debt at Ush3.7 trillion (USD4 billion) while some statistics indicate that the country’s external and domestic debt is growing at 2 percentage points of GDP every year.

 

Experts argue that, as in the case of Ethiopia, which has used diaspora bonds to reduce the burden of external borrowing for its infrastructure projects since 2008, Uganda could use these bonds to ease the country’s heavy borrowing from external financial institutions.  However, Uganda’s plans for a diaspora bond will be delayed as they have have hit a snag due to the low level of awareness, says a Bank of Uganda (BoU) report. Arnold Bagubwagye, Assistant Director of Financial Markets at the BoU, told a recent dialogue on Diaspora Resource Mobilisation and Utilisation in Kampala that it may not be feasible to issue a diaspora bond independently, as there are concerns about the lack of critical mass to fully subscribe to this diaspora bond.

 

The Ugandan diaspora—a powerful resource

Ugandans in the diaspora are a powerful resource in the development of the economy through their annual remittances, currently rated at about USD900 million. BoU officials said that many Ugandans in the diaspora opt to invest back home by buying property and establishing small businesses.  A diaspora bond, regulated by a competent body, would spare Ugandans living abroad the trauma of the loss of their savings through fraudulent deals.

 

The Ugandan government is faced with the challenge of inadequate data on its nationals living abroad, such as their whereabouts, their earnings and their savings culture. Another challenge experienced is the diaspora’s difficulty in understanding some financial instruments like diaspora bonds.

 

BoU intends to attract the Ugandan diaspora to invest in ordinary government securities and a special channel is being developed for this.  “Once we attain a critical mass, then a full diaspora bond can be considered”, Mr. Bagubwagye added.

 

LSL World Initiative specialises in unlocking diaspora values through innovative financing

LSL World Initiative (LSL) is a global organisation specialising in innovative financing for development (IFD) and dedicated to the socio-economic empowerment of developing and emerging countries.

 

The World Bank defines innovative financing for development as mechanisms “that depart from traditional approaches to mobilizing development finance [---].  Innovative development finance therefore involves non-traditional applications of solidarity, PPP, and catalytic mechanisms that support fundraising […] engaging investors beyond the financial dimension of transactions, as partners and stakeholders in development; or deliver financial solutions to development problems on the ground” (World Bank 2009).

 

LSL’s innovative financing for development model focuses on unlocking the diaspora values through micro-surcharges on both the telecoms and financial services industry to spur economic growth and boost domestic revenues.  The organisation helps governments to identify new sources of revenue, including financial services, electronic tax collection, E-stamping and surcharges on remittances and provides assistance in managing, leveraging, unlocking and protecting these revenues through a multi-partnership approach.

 

The model could also benefit a country like Uganda, by contributing to the country’s goals and assisting it to create cost-effective, scalable and sustained solutions for its socio-economic problems.

 

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Uganda borrows mostly to facilitate economic infrastructural development, largely from the International Monetary Fund, the World Bank, the African Development Bank, China Exim Bank and Japan.  World Bank (2013) data places Uganda’s current external debt at Ush3.7 trillion (USD4 billion) while some statistics indicate that the country’s external and domestic debt is growing at 2 percentage points of GDP every year.

 

Experts argue that, as in the case of Ethiopia, which has used diaspora bonds to reduce the burden of external borrowing for its infrastructure projects since 2008, Uganda could use these bonds to ease the country’s heavy borrowing from external financial institutions.  However, Uganda’s plans for a diaspora bond will be delayed as they have have hit a snag due to the low level of awareness, says a Bank of Uganda (BoU) report. Arnold Bagubwagye, Assistant Director of Financial Markets at the BoU, told a recent dialogue on Diaspora Resource Mobilisation and Utilisation in Kampala that it may not be feasible to issue a diaspora bond independently, as there are concerns about the lack of critical mass to fully subscribe to this diaspora bond.

 

The Ugandan diaspora—a powerful resource

Ugandans in the diaspora are a powerful resource in the development of the economy through their annual remittances, currently rated at about USD900 million. BoU officials said that many Ugandans in the diaspora opt to invest back home by buying property and establishing small businesses.  A diaspora bond, regulated by a competent body, would spare Ugandans living abroad the trauma of the loss of their savings through fraudulent deals.

 

The Ugandan government is faced with the challenge of inadequate data on its nationals living abroad, such as their whereabouts, their earnings and their savings culture. Another challenge experienced is the diaspora’s difficulty in understanding some financial instruments like diaspora bonds.

 

BoU intends to attract the Ugandan diaspora to invest in ordinary government securities and a special channel is being developed for this.  “Once we attain a critical mass, then a full diaspora bond can be considered”, Mr. Bagubwagye added.

 

LSL World Initiative specialises in unlocking diaspora values through innovative financing

LSL World Initiative (LSL) is a global organisation specialising in innovative financing for development (IFD) and dedicated to the socio-economic empowerment of developing and emerging countries.

 

The World Bank defines innovative financing for development as mechanisms “that depart from traditional approaches to mobilizing development finance [---].  Innovative development finance therefore involves non-traditional applications of solidarity, PPP, and catalytic mechanisms that support fundraising […] engaging investors beyond the financial dimension of transactions, as partners and stakeholders in development; or deliver financial solutions to development problems on the ground” (World Bank 2009).

 

LSL’s innovative financing for development model focuses on unlocking the diaspora values through micro-surcharges on both the telecoms and financial services industry to spur economic growth and boost domestic revenues.  The organisation helps governments to identify new sources of revenue, including financial services, electronic tax collection, E-stamping and surcharges on remittances and provides assistance in managing, leveraging, unlocking and protecting these revenues through a multi-partnership approach.

 

The model could also benefit a country like Uganda, by contributing to the country’s goals and assisting it to create cost-effective, scalable and sustained solutions for its socio-economic problems.

 

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