KCB plans to boost Diaspora investments

By John Oyuke

Property investors are preparing for an imminent windfall as local banks step up efforts to persuade Kenyans in the Diaspora to exploit the booming real estate business.

In the latest development, Kenya Commercial Bank (KCB) last week took a number of investors in the sector to South Africa in a mission to tap Diaspora skills and financial resources. Research has shown that South Africa is the third largest Diaspora market for mortgage products in Kenya after the traditional sources of United States of America and United Kingdom.

A senior Manager with KCB, Mr George Laboso described the trip as “highly successful”.

“We had over 300 Kenyans living in South Africa attending our event. We were able to offer them our competitive mortgage products and savings accounts. The developers who travelled with us managed to sell their housing units as well,” he said.

Foreign remittances

He said the participating property developers and investors were exposed to big master plan developments, mixed use developments, commercial properties, and low cost housing and golf estates.

“With foreign remittances playing a big role in the Kenyan economy, KCB is committed to providing even more investment vehicles as opportunity arises to meet all available needs of the market even for Kenyans working and living abroad”, said Laboso, who manages sales of mortgages at KCB.

The bank early this year introduced foreign exchange loans for building and purchase of ready houses and commercial properties. It said the product is aimed at meeting the needs of the Diaspora market, which remitted an all time high of $519.9 million last year.

Officials of the bank said the dollar denominated loan attracts rates as low as seven per cent compared to local currency loans and is a major advantage to those who earn their income in dollars.

The Chief Executive Officer of Meridian Park Estate, a real estate development company Mr Edward Ndirangu, suggested that Kenyans in Diaspora be encouraged to invest in the nation’s economy as a means of repatriating funds from abroad.

Speaking to The Financial Journal on return from South Africa last week, he said many Kenyans abroad would readily repatriate funds for investments in the local economy if they were provided with the right incentives. “With their entrepreneurial skills and financial resources, the Diaspora also contribute to the reconstruction of their home countries by creating jobs and economic growth through joint ventures, partnerships, technology transfers and capital investments,” he added.

He disclosed that the tour of South Africa, which is re-known for its world class architectural designs and master planning also resulted in the company receiving robust response for its planned building of an ultra-modern shopping mall in Karen, Nairobi. “We always try to keep in touch with the Diaspora and inform them about the opportunities available in the country, and also help them send money back to their families.

Traditional markets

We also pass on to them information on available projects like housing,” he said.  Kenya Commercial Bank’s foray into the South Africa market comes amid reports that Africa is emerging as a key source of remittances for Kenyans competing with the traditional lead markets.

A joint report released by the World Bank and Central Bank of Kenya last year says Kenyans living and working in different parts of Africa in 2009 sent an estimated Sh38 billion. This accounts for 25 per cent of total remittances to Kenya, which stood at Sh152 billion.

Building technologies

Prof Macharia Munene, who teaches history and international relations at USIU, said the findings are an indication that Kenyans working in other African countries are excelling in business and careers.

“If they were not they would not have enough money to send home,” said Munene in a recent interview.  During the tour, Laboso said the developers learnt that South African Government and local authorities meet costs of infrastructure unlike here where developers meet these costs and pass them to customers. “The building technologies is also different from the one in Kenya,” he added.

He said Kenya should also lead by example by putting up houses using the low cost technologies available in the market.

“This can be done through National Housing Corporation, ministry of housing and all those public corporations that have land,” Laboso added.