How Kenya plans to net Sh1trn from the diaspora
Remittances from Kenyans living and working abroad have averaged $3.56 billion (Sh568.67 billion) in the last five years.
What you need to know:
- The government is planning to roll out a number of incentives targeting Kenyans in the diaspora in a bid to boost remittances.
- The US controls 55.86 per cent of the total remittances and Saudi Arabia, which last year overtook the UK, is the second largest source of remittances into Kenya.
The government is planning to roll out a number of incentives targeting Kenyans in the diaspora in a bid to boost remittances to at least Sh1 trillion a year, and boost the country’s foreign exchange reserves.
Consequently, the State Department for Diaspora Affairs (SDDA) is looking for a consultant to conduct a baseline survey, which will steer development of a framework and tactical plan for enhancing remittances.
“This assignment is intended to assist SDDA in establishing a conducive environment and an enabling ecosystem, which will help achieve the target of Sh1 trillion in annual remittances by 2027 and at the same time achieve an equitable spread between remittances for personal savings and investments,” said SDDA in a tender document.
Remittances from Kenyans living and working abroad have averaged $3.56 billion (Sh568.67 billion) in the last five years, growing by four per cent last year to hit $4.19 billion (Sh642.44 billion), according to the Central Bank of Kenya (CBK) data.
The Sh642.44 billion means the annual remittances will have to grow by about 36 per cent in the next four years to hit the targeted Sh1 trillion per year by 2027.
CBK data shows the growth in the past four years was about 50.2 per cent, from $2.79 billion (Sh446.05 billion) at the end of 2019 to last year’s performance, making the department’s target look easy even before the planned interventions.
The State department will, however, be concerned that last year marked a softened growth in diaspora inflows, largely on account of flattening or reduced remittances from Kenyans in America, who account for nearly 60 per cent of the amount.
The US, despite controlling 55.86 per cent of the total remittances, posted a marginal 0.26 per cent rise to $2.34 billion (Sh373.2 billion).
The world’s largest economy has been battling high pressure on food prices of goods in the last three years, which pushed up the cost of rent, medical care as well as prices of cars and car insurance.
Inflation has squeezed earnings by workers, reducing the disposable income that Kenyans in that country tap to help families and dependents back home.
However, CBK governor Kamau Thugge said last Wednesday he expects US remittances to continue growing.
“The US seems to have a fairly strong economy at the moment. The job market is fairly strong and so we expect continued growth of the remittances from the US,” said Dr Thugge.
Saudi Arabia, which is President William Ruto’s priority destination in his search for job opportunities abroad, last year overtook the UK to become the second largest source of remittances into Kenya.
