Kenya, like many other African nations, is highly reliant on diaspora remittance to prop up its economy. Money sent home by Kenyans living abroad has grown exponentially over the past decade.
The Central Bank conducted Kenya’s first Diaspora Remittances Survey which indicates that inflows to Kenya have increased tenfold in the last 15 years, reaching an all-time record of $4.027 billion (Ksh559.57 billion) in 2022.
This phenomenal growth points to the importance of remittances as a source of foreign exchange to the country, equivalent to more than 3% of the country’s GDP.
Kenya is now earning more foreign exchange from diaspora remittances than each of its major exports – coffee, tea, and horticulture – despite the persistent criticism of its poor diaspora policy.
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When it comes to sending and receiving money from abroad, data indicates that poor exchange rates, high fees, and commissions may highly reduce the amount of funds received at the end of the transaction.
From back in the day when hard cash, money orders, and cheques would be sent via snail mail, there are now an increasing number of ways to send money back home that are cheaper and less time-consuming.
This, as technology has made the process of sending and receiving money easier and faster, making the global market more accessible and less daunting, which in turn gives people a wider range of options.
While the majority of Kenyans overseas send money home for household needs such as rent, education, and medical expenses, more people are sending money for long-term investments in sectors such as real estate, agriculture, and retail.
In recent years, investment companies have focused on linking Kenyans in the diaspora to local investment opportunities.
However, the cost of sending money back home is still a key barrier to the growing diaspora remittance. With this in mind, relaxing legal barriers and remittance costs will be crucial to the future growth of Kenya’s economy.
On average, Sub-Saharan Africa, including Kenya, is the most expensive region in the world to send remittances to.
According to a World Bank report, it costs 8.9 percent of the transfer value to send money into the region, compared to the global average of 6.8 percent.
While this has reduced from 10.14 percent in 2014, there is still plenty of room for improvement in order to attract more remittances from Kenyans living abroad.
The government has so far taken the right step by establishing the State Department for Diaspora Affairs.
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This is where Grey comes in. The firm recently announced its entry into the Kenyan market as part of its plans to expand into the greater East African region.
Founded in 2021, Grey, a Y-combinator-backed fintech startup, offers an international money transfer service that enables its users to send and receive international payments quickly and without restrictions.
It enables its customers to have virtual international bank accounts and cards for free and enjoy a seamless foreign payment process.
Users can create a foreign USD, GBP, and EURO bank account for free, send money to the UK and Europe, and receive payments from over 88 countries.
Using advanced international money transfer solutions, gig workers, digital nomads, and diasporas can now be there for their loved ones when it matters the most. With Grey, you can quickly and easily send and receive money across borders, playing a major role in improving financial prosperity and economic development for the region.
Related Content: Diaspora Remittances Drop For The First Time In 13 Years