KCB sets aside Sh10b for Kenyans in diaspora

Kenya Commercial Bank (KCB) has set aside Sh10 billion for onward lending to Kenyans in the diaspora who want to finance investments back home.

The bank signed a credit partnership with the US Diaspora Sacco Society, which has more than 2,000 members, to enable borrowing.

KCB Head of Diaspora Banking Vincent Aberi said in an interview that the setting up of the fund is part of a bigger strategy by the bank to reach out to Kenyans living abroad who are willing to invest in the country but face funding challenges.

Remittance structures

“Over the years, Kenyans living abroad have been facing difficulties financing their investments locally. We created the fund after consultations with the management of the US Diaspora Sacco. They agreed to borrow from us to finance their members’ developments in businesses in the local and regional market, such as learning institutions, real estate, farming, transport, wholesale and retail,” said Mr Aberi.

The diaspora, he added, are interested in investing at home, but are restrained by the lack of proper remittance structures, such as global bank and money transfer systems.

According to the Central Bank of Kenya (CBK), Kenyans abroad remit more than Sh100 billion every year through commercial banks and other authorised international remittance service providers, such as Western Union, MoneyGram and M-Pesa.

Last year, the country received Sh116.1 billion in remittances, up from Sh105.3 billion in 2012.

Nearly half of this money comes from Kenyans living in North America, followed by those in Europe and then other global markets.

Banks are not the only ones reaching out to the largely untapped diaspora market. Last year, local property agents participated in a homes expo in New Jersey, US, to showcase the real estate projects and products available to them.

The expo, organised by Kings Pride, a Kenyan property firm, attracted 24 local and international exhibitors, and more than 50 delegates.

“Kenyans in the diaspora have demonstrated a high appetite for investment opportunities, particularly in the local real estate market,” the firm’s chairman, David Karau, said.

“But lack of proper procedures that would have enabled them monitor their investments saw a number of them lose millions of shillings to unfaithful friends and relatives.”

Mortgage deals

During the exhibition, Aberi said his bank sealed retail and commercial mortgage deals worth about Sh5 billion.

“So far, we have processed applications worth Sh1.6 billion. We are still processing more credit documents, indicating the demand for our loan product,” he said, adding that the Government should consider offering the diaspora investment incentives, such as tax holidays and rebates.