How State can entice Kenyans abroad to invest more at home

For many Kenyans living abroad, investing back home is both a dream and a gamble. Stories abound of hardworking expatriates sending their life savings back home only to return and find a non-existent investment. Yet, despite these concerns, the government is aggressively courting diaspora funds by encouraging Kenyans abroad to invest back home. With this, the government also hopes to get a significant slice of the pie through a planned diaspora bond, which aims to raise $500 million (Sh64.75 billion) by 2026. Kenya's diaspora community is a formidable economic force. Last year alone, they sent home $4.94 billion (Sh640.75 billion), an increase of 18 per cent compared to 2023. This by far surpasses foreign direct investment and donor funding. Interestingly, this is mostly for basic needs like food and other living expenses, according to data from the Central Bank of Kenya. Despite aggressive efforts to attract diaspora funds, no concrete safeguards are in place to protect investors. The Diaspora Policy is still in the pipeline, as recently acknowledged by Prime Cabinet Secretary Musalia Mudavadi. Many other safeguards, like the Diaspora Investment Policy, are also yet to be formulated, exposing Kenyan expatriates to the same fraud and bureaucratic hurdles that have long plagued diaspora investments, especially in real estate. A recent Commonwealth report has revealed that 61 per cent of Kenyans living abroad fear investing back home, primarily because of trust issues. These fears are not unfounded. Many diaspora investors have fallen victim to scams orchestrated by unscrupulous relatives, friends, and intermediaries. The cases include fake land sales, ghost properties, fraudulent title deeds, and land sold multiple times to different buyers. This has left unsuspecting investors grappling with substantial financial losses or embroiled in lengthy court battles. If the government is serious about harnessing the full potential of diaspora investment, it must confront the systemic inefficiencies in Kenya's investment landscape. According to a World Bank report, Kenya ranks 134th globally in the ease of registering property, underscoring the bureaucratic inefficiencies and corruption that expose investors to risk. Lack of strong legal protections, financial transparency, and effective oversight mechanisms further exacerbate the problem. If no action is taken, efforts like the diaspora bond may struggle to gain the trust of those it seeks to attract. One solution is to mandate digital verification and registration of all real estate transactions involving diaspora investors. The government can invest in a blockchain-based property registry that will integrate land verification services through e-Citizen, CBK, and the Kenya Investment Authority. This will provide investors with tamper-proof records, allowing them to remotely verify ownership, conduct due diligence, and access investment advisory services. The government can further reinforce this by establishing a Diaspora Investment Protection Authority to regulate, certify, and monitor real estate transactions. Such an authority would ensure that the online portal provides access to verified properties, sellers, and real estate developers, creating transparency and security in transactions. Furthermore, a government-backed insurance scheme should be introduced to protect diaspora investors from fraud. Under this programme, developers and sellers would undergo verification before engaging in transactions, and investors who fall victim to fraud would receive partial or full compensation. These measures combined would provide a watertight framework for protecting investments, consequently boosting investor confidence. Legal reforms must also be strengthened to fast-track diaspora land disputes and introduce stricter penalties for fraudulent property transactions. The creation of a special Diaspora Land Tribunal would provide a dedicated avenue for resolving disputes swiftly, ensuring that investors do not get entangled in Kenya's notoriously slow judicial processes. Standardising property sales contracts for all real estate deals involving diaspora investors would also provide an added layer of legal protection. To sweeten the deal, the government can introduce tax incentives and special investment zones to attract more diaspora investors. Offering stamp duty exemptions, tax breaks on rental income, and discounted land rates for long-term investors would encourage more Kenyans abroad to participate in property ownership and development. In addition, fast-tracking construction permits for diaspora-funded projects would make real estate investment more efficient and attractive. My emphasis on real estate stems from both professional experience and the fact that land and property ownership form the bedrock of all other investments. If we can establish a secure framework for property investment, it can serve as a blueprint for expanding diaspora involvement in agriculture, manufacturing, supply chain, and other critical sectors, unlocking even greater economic potential. The government's ongoing efforts, such digitisation of land registries, enhanced regulatory oversight, and the introduction of diaspora bonds, signal a commitment to progress. However, reforms alone are not enough. Without robust governance, strict enforcement, and investor protections, their impact will remain limited.

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