Kenyans living abroad inflows drop to Sh9.2b in August

By WINSLEY MASESE

Kenyans living abroad sent home less money in August than in the previous month.

According to figures released by the Central Bank of Kenya (CBK), however, the remittances from Kenyans in the diaspora slumped to Sh9.2 billion ($107m) in August compared to Sh9.7 billion ($112.8m) in July.

However, remittance was over Sh70 billion during the first seven months of 2013, compared to Sh67 billion remitted over a similar period last year.

The rise by Sh5 billion injected into the local economy is an indication that intense government efforts urging Kenyans living abroad to invest back home are bearing fruit.

North America accounted for about half of the remittances, largely attributable to the large number of Kenyans with gainful economic activities living in the region.

Rest of the world

Kenyans living in Europe contributed the second largest remittances, with those living in the rest of the world coming third.

Despite the shrinkage, the amount is expected to increase towards the end of the year when a number of those in the diaspora are expected to send money home to cater for the end-year festive activities.

Past studies have shown that some of the sectors Kenyans living abroad invest in include the stock market, government security bonds and the real estate sector.

Remittances are among the country’s main sources of foreign exchange in East Africa’s biggest economy, alongside tea, horticulture and tourism. The remittances go to shore up the country’s foreign exchange reserves, which in turn are used to test the strength of the exchange rate, especially against the major currencies. Imports are made using foreign currencies.

The government has tried to formalise the use of remittances by offering a diaspora infrastructure bond to encourage Kenyans living abroad to invest in the country’s infrastructure.In the past, a larger percentage of the billions of dollars remitted to Kenya annually went to the consumer economy – mostly to buy food and pay school fees.

This is, however, expected to change as they have started investing in government securities targeted at them, such as infrastructure bonds and the Savings Development Bond.

CBK is for the first time targeting the diaspora with a Sh36 billion infrastructure bond, with the twin aims of boosting currency reserves and plugging a state budget deficit.

World Bank recently said countries, including Kenya, had overlooked the role remittances could play in dealing with financial shocks.