Business and Technology Reporter in Nairobi, Kenya
Nation Media Group
Kenya’s diaspora remittances have continued to grow this year, with projections indicating a new high by the end of 2023.
Figures from the Central Bank of Kenya show that total money remitted by Kenyans abroad in the 12 months to November 2023 was $4.17 billion, from $4.021 billion in the same period last year.
This was despite active efforts by the government to convert some of these monies into investments in the domestic equity and bond markets, as foreign investors fled the local bourse and foreign-currency bonds remained expensive.
Less than one percent of the remittance has traditionally been used to invest in financial markets instruments like bonds or shares, according to the Diaspora Remittances Survey published in January by the CBK.
It is, however, not clear whether the government sought to tap the remittances into investments at source, in which case the remittance figures should have dropped gradually, or at home, which would mean remittance accounting would have not been impacted.
The department of investment promotion and the Kenya Diaspora Alliance did not respond to our queries on the period after which they anticipated success, the progress of the mobilisation and the impact it would have on remittance figures.
Abubakar Hassan, principal secretary in the department of investment promotion, in April told a forum of Kenyan diaspora that his division had been “tasked to mobilise and convert at least 50 percent of the diaspora remittances into investment flows.”
The department, along with top capital markets officials, including Nairobi Securities Exchange and the Capital Markets Authority bosses, held a series of forums with diasporas, to sensitise them on investment opportunities in the country. This was followed by the launch of DhowCSD, an online portal by the Central Bank of Kenya (CBK) meant to improve investment in government securities.
These measures came as the Nairobi bourse suffered massive foreign investor flight, occasioned by a depreciating Kenyan shilling and rising interest rates in developed economies.
Total foreign investor outflows from the stock market between January and September 2023 reached Ksh18.95 billion ($120.7 million).
At the same time, African governments, including Kenya’s, have been struggling to raise finance from the international bond markets due to high rates, which had forced Kenya to cancel a planned $1 billion Eurobond in June last year.
With diaspora remittances growing to become Kenya’s largest foreign exchange earner, the government has been seeking to leverage its citizens abroad for cheaper foreign-currency denominated finance.
Deputy President Rigathi Gachagua told Kenyans in Botswana during a visit to the country in April that the State will establish “an investment forum guaranteed by the government” to secure investments and savings back home.
“The money from the diaspora is so huge; we can have an enormous reserve from which we can borrow,” Gachagua said, affirming the government’s intentions to borrow from the diaspora.
The latest diaspora remittance survey shows that most of the money sent home is used by the recipients to buy land or houses, pay mortgage for the senders, buy food and household goods or cover education expenses for the receivers.
