Increased Contributions from Kenyans in the Diaspora Boosting Economy

By Soko Directory Team / Published June 2, 2016 | 8:33 am



Kenya-Airways

Kenyans have been migrating in large numbers to different parts of the world since the 1960s to acquire better training, education, job opportunities and for political reasons. To date Kenyans continue to migrate in search of better economic opportunities, resulting in a major brain drain.

The number of Kenyans abroad is estimated to be about 3 Million and is continuously on the rise. The Diaspora possesses immense resources which can greatly contribute to the transformation of our country as envisaged in the Kenya Vision 2030. Part of these resources include inward formal remittances, which according to the Central Bank of 9 Kenya stood at Sh. 113 billion in the year 2013, accounting for 2.98 percent of the GDP.

Similarly, the contribution of the Diaspora in terms of skills, expertise and transfer of knowledge to Kenya is invaluable though this potential is not yet fully developed or harnessed. Despite the huge potential of the Kenyan Diaspora, there are challenges hindering its contribution to national development. Some of the challenges include; the high cost of remitting money, inadequate capacity to offer consular services, inadequate mechanisms of protecting Kenyans in the Diaspora, weak structures to inform Kenyans in the Diaspora of investment opportunities, untapped skills and expertise and lack of an integrated database on Kenyans abroad.

The Central Bank of Kenya updated the information by reporting that a total of Sh14.4 billion was sent in the country in the month of April with those living in the US being the main contributors. This is an increase by 15.3 percent as compared to the amount sent home at the same period last year from North America.

CBK Added that remittance inflows from North America increased by 4.7 per cent and accounted for 50.2 per cent of total inflows in April 2016. Inflows from the rest of the world also increased by 8.4 per cent while that from Europe decreased by 7.3 per cent. Remittances from the US rose by Sh1 billion between the month of February and April to Sh7.2 billion resulting in its contribution growing to 50.2 per cent from 45.3 per cent two months ago.

Kenyans abroad continue to play an important role in the development of the country through remittances. However, the cost of remitting money back home through the existing formal channels remains high leading to the use of informal channels. This makes it difficult for government to track remittances and to advise Kenyans appropriately. Weak structures and uncoordinated mechanisms to create awareness for Kenyans Abroad on the investment opportunities available in different sectors of the economy is also another challenge, coupled with lack of incentive framework to promote Diaspora investments.

Remittances are important to Kenya as they are the largest source of foreign currency and provide the biggest cushion against the country’s exchange rate. The shilling has held steady against the dollar in the last few months allowing the CBK move to ease its monetary policy stance by a one percentage point of the indicative Central Bank Rate.

 




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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