Diaspora: Kenya's secret source of developmental cash

By John Njiraini

Kenyans living abroad are remitting a staggering Sh150 billion back home annually, and have become a key engine for economic growth, a study discloses.

The study by the World Bank shows 2.6 million Kenyans receive a total of $2 billion (Sh150 billion) annually from Kenyans in the Diaspora.

The amount is way above Central Bank of Kenya figures, which show Kenyans abroad sent home $609 million (Sh45.6 billion) last year down, from $611 million (Sh45.8 billion) in 2008

These individuals, who represent 14 per cent of the adult population — estimated to 18.6 million according to last year’s census results— typically receive Sh8,000 ($105) from their relatives abroad seven times a year.

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While the perception has been that most of this money is spent on daily expenses like food, clothes, housing, utility bills and medicine, the study found that a huge chunk of the cash is used on ventures aimed at uplifting the recipient’s living standards.

About 35 per cent spend the money investing in small businesses, 33 per cent to pay for university education for family members, eight per cent invest in land or a house, while four per cent open a savings account. Only 20 per cent spend the money on daily expenses. In North America, US accounts for the largest chunk of remittances, at 35 per cent, while UK leads in Europe at eight per cent. In Asia and Middle East, United Arab Emirates is the main source at six per cent, and in Africa, Uganda leads, at nine per cent.

"Remittances could be the economic engine of Kenya in the 21st century," said Sergio Bendixen, the President of Bendixen & Associates who conducted the study on behalf of the World Bank, in collaboration with the Central Bank.

The study, which sought to profile remittances inflows to the country last year, was conducted between July 14 and September 4, and some 2,423 adults in 31 of 47 districts were interviewed during the course of the study.

The study is part of World Bank’s Future for African Remittances (FAR) programme, which seeks to enhance competition and innovation in remittances to Africa.

"Under the FAR programme, the World Bank is boosting its efforts in sub-Sahara Africa to assist governments and remittance service providers realise the development impact of remittances," said Benjamin Musuku, World Bank’s Africa Region Payment Systems specialist.

Largest recipient

According to the study, men are the largest recipients of remittances, at 59 per cent, while Kenyans living in rural areas constitute the biggest number of recipients, at 68 per cent.

Interestingly, and contrary to popular belief that poor Kenyans are the main beneficiaries of remittances, the reality, according to the study, is that majority of the recipients are Kenyans already living comfortably. About 92 per cent have a mobile phone, another 92 per cent have a bank account, 43 per cent at least have secondary education, 34 per cent have a monthly household income of between Sh10, 000 and Sh20, 000, while 53 per cent view their personal economic situation in Kenya as good.

Interestingly, of all the interviewed individuals, only 35 per cent have a family member or relative living in another country outside Kenya.

Remittances into sub-Saharan Africa, the study indicates is expected to rise by two per cent this year, despite a faltering world economy.

Remittance flows represent a significant share of gross domestic product for Kenya and many African countries.