The perceived and actual effects of remittances on poverty reduction and development in Tanzania: Case study of Leicester-based Tanzanian diaspora.

Abstract

Remittances to sub-Saharan Africa have steadily been on increase in recent decades. However, the full socio-economic benefits of remittances to some countries, such as Tanzania are far from clear. Consequently, the importance of this economic phenomenon in Tanzanian society is rather inconclusive, because their effects on poverty reduction and development in Tanzania are based largely on evidence from the regional area (i.e. sub-Saharan Africa) and from other developing countries. This study has examined the perceived and actual effects of remittances on poverty reduction and development in Tanzania from the viewpoint of Leicester-based Tanzanian diaspora and the remittance receivers’ in Tanzania. The study was, therefore, based in two places, Leicester (United Kingdom- UK) and Tanzania. It adopts an inductive approach to enquiry for which both qualitative and quantitative data were collect from the three case studies: The first case study is Leicester-based Tanzanian diaspora (the remittances senders), the second case study is remittance receivers in Tanzania (the remittances users), and third case study is Tanzanian government officials (i.e. researchers, policy makers and regulatory bodies). The significance of this study is that it is a two-way process conducted from the remittance senders’ (the Leicester-based Tanzanian diaspora) and remittance the receivers’ perspectives (the remittance users in Tanzania). The study, therefore, involve tracking of remittances from Leicester to Tanzania. The study provides better insight and understanding of the effects of remittances on poverty reduction and development in Tanzania. It help to understand how best to harness diaspora and remittances through the understanding of diaspora’s capabilities and interests, as well as types of remittances sent to Tanzania, channels of sending, and any obstacles that hamper the effectiveness of remittances on poverty reduction and development in Tanzania. The study also offers insight into why the Tanzanian diaspora continues to remit. Amongst other reasons, it includes the retained belief in the Ujamaa ideology (family-hood or brother-hood). In turn, this adds significant contributions on the theories of migration and development, and motives to remit. The overall finding of this study is that remittances remain important to Tanzanian society, because they help to increase the amount of disposable money for spending on education, health, consumption, business formation, and investments. Unlike other international aid, remittances go directly to receivers. Thus, remittances tend to have immediate and direct effects on the livelihoods of the receivers. Remittances received from Leicester, therefore, help to improve the quality of lives of the recipients. Hence, they help to reduce depth and severity of poverty on the receiving communities. Nevertheless, the findings of this study clearly show that from a developmental perspective, one of the major challenges to the effects of remittances on poverty reduction and development in Tanzania is to motivate the diaspora to conduct their remittance transfer operations through formal channels. This has remained a major challenge because of high fees associated with transfer of financial and material remittances, lack of formal channels in rural areas of Tanzania, and a total lack of appropriate formal channels for transmitting social remittances to Tanzania. The study recommends that policies on diaspora and remittances should be designed to encourage diaspora to send remittances through formal channels with low transaction costs. This is important because it will make easier to channel remittances into sustainable developmental projects that could fuel community and national development, thereby touching not only the direct recipients but also the general public. The study also recommends that both Tanzania and the UK government need to ensure social remittances (e.g. skills, technology-know-how, knowledge and experiences) are effectively being acquired, utilized and transmitted to Tanzania for the development of the country. This can be achieved by create a common platform for dialogue between diaspora, Tanzania and the UK governments, which will enable to understand local needs alongside the skills, knowledge, capacities and interests of the diaspora. The study concludes that in spite of other interventions and perhaps a lesser emphasis on social remittance sending to Tanzania nowadays, diaspora remittances remain a critical input into poverty reduction and development in Tanzania.