Equities, Stock Market Most Preferred Investments for Kenyans in Diaspora

A report by Pangea Trust, a Norwegian-based accelerator company, has revealed that Kenyans in the diaspora looking to invest beyond real estate prefer equities and stock over other alternatives.

About 36 percent of Kenyans abroad sent their money home to buy stocks and be injected into private equities or venture-related dealings.

Only 31 percent sent money for their own businesses whereas 23 percent sent their money for family member-owned businesses.

The preference in the stock market and private equity instruments has been linked to financial innovations in the market that have increased channels for transactions for Kenyans in other countries.

“Very few investments were directed at local non-family-owned businesses… 10 percent of Kenyan diaspora invested in other businesses. It is possible that this is linked to lack of access to credible information on available opportunities of MSMEs that they could invest in,” read the report.

The Pangea Trust report done in collaboration with Swedish International Development Cooperation Agency and the Swedish embassy in Kenya is part of the Diaspora Investment Partnership aimed at mobilizing remittances and funding start-ups and SMEs.

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The participants included 143 Kenyans sourced from across 27 countries including the US, Sweden, and Finland.

One in three (29 percent) of the respondents surveyed, however, stated that they have investments in the real estate and construction sector.

The diaspora remittances, which contribute the largest source of Kenya’s foreign exchange reserves, were also directed to the agricultural sector. Other inflows went to financial services and entertainment of the arts sector.

Healthcare, manufacturing, and green business sectors received the least investments.

Despite the economy still reeling from the effects of the Covid-19 pandemic, Kenya continues to receive high remittance inflows.

The diaspora remittances in the 9 months to September rose by 20 percent to $2.71 billion (301 billion shillings), up from $2.27 billion (252.5 billion shillings) in the same period in 2020.

This growth has been attributed to the increase of immigrant populations moving out of the country looking for jobs.

Increased earnings by immigrants and the pandemic which saw families abroad send more money back home to cushion their loved ones also contributed to the growth.

The US market remains the largest contributor with a share of 53.85 percent of the total remittances followed by the UK, South Africa, and Saudi Arabia at 7.4 percent, 6.3 percent, and 3.9 percent, respectively.