Macroeconomic determinants of emigration from Uganda, 2010-2017

Abstract

For a long time Ugandans have been migrating to developed countries in search of employment opportunities (Olema, 2009; Musonda, 2006). While recent waves of emigration from Uganda, to especially GCC countries are far more attributed to unemployment rate, estimated at 19% (UBOS, 2019). The relationships through which unemployment and other key economic indicators influence emigration remain unclear. Therefore, the study went ahead to determine the macroeconomic factors influencing emigration from Uganda. The specific objectives of the study included: to examine the relationship between GDP per capita and emigration from Uganda; to determine the effects of exchange rates on propensity to emigrate from Uganda; to examine the relationship between inflation rate in Uganda and emigration; to examine the relationship between unemployment rate and emigration. Data on number of emigrants from Uganda was extracted from UBOS border surveys and census data. Data on macroeconomic variables was taken from World Bank Development indicators (WDI) and COMTRADE database for country pairs and Uganda. Gravity model variables were taken from CEPII dataset. A panel data model was adopted in this study, a modified gravity model was fitted to examine each of the factors (independent variables) that influence emigration from Uganda. Results indicate that emigration rises on average as GDP for source country (Uganda) rises, the origin-country elasticity of rising emigration prevalence to rising GDP in Uganda is 0.43 to all country destinations in the sample, and on average increases with increase in inflation rates by about 2.9 percent in the source (Uganda), and decreases by 0.43 percent with an increase in inflation in the destination country. Further, results indicate that there is a decrease in emigration as a result of increase in GDP per capita in destination countries in particular are 157.7 and 306.8 percentage points, respectively, in static and dynamic models. Other factors, such as sharing a trading relationship with Uganda, and having a past colonial relationship were found to increase the propensity to emigrant from Uganda by, respectively, 1.7, 2.4 percentage points. It is recommended that Uganda should remove barriers that pertain to acquisition of travel documents; establish bilateral labor relationship with countries to enhance movement within the major trading blocs such as East African Community and COMESA trading bloc, and with emergence of ASIA as a major player in Uganda’s economy and trading relations.