How diaspora property investors have changed tack in remittances

Kenya receives Sh931.8 billion in remittances annually. [File, Standard]

From a bird’s-eye view, the relationship between diaspora remittances and the country’s real estate sector is direct. A relative receives money from the diaspora, and a building is erected back home.

But a new report shows this relationship is complex, nuanced in ways beyond cause and effect, and that one look at the numbers will not tell you the whole story. While the report shows that investment in real estate is the least of the top 10 uses of diaspora remittances to the country, it also details that persons employed in the sector are the second leading individuals who receive the inflows. The first are those in the financial and insurance sectors.

The report also documents how this cash flow has transformed the type of dwelling of recipients’ households, as the majority are made of stone and cement, hinting at how this foreign currency is being invested.

The report compiled by the Central Bank of Kenya (CBK), Financial Sector Deepening (FSD) Kenya, and the Kenya National Bureau of Statistics (KNBS), shows just 2.2 per cent of recipients of remittances invest it in real estate.

According to the report, Kenya receives Sh931.8 billion in remittances annually. This is both in hard currency and in kind.

This amount is more than the Sh661.2 billion documented by the 2026 Economic Survey Report.

This report by KNBS gets its figures from CBK. However, CBK figures are from formal financial channels such as banks, forex bureaus, mobile money and money transfer operators.

More money still comes into the country through informal channels such as hundis, relatives, and friends.

The 2025 Remittances Household Survey Report is the first attempt by the government to get a clearer picture of how much the country receives and its uses by the household recipients.

The main uses of remittances, according to the report, is food and household goods (73.1 per cent), education (31.4 per cent), and medical expenses (23.9 per cent).

“This indicates the critical role remittances play in sustaining basic consumption and cushioning families against economic shocks,” the report reads.

While this report shows that just 2.2 per cent of recipients of remittances use it for real estate investment, the long-standing narrative behind the boom in the sector has been that the mushrooming skyscrapers and bungalows are being funded by the diaspora community. Some companies are opening satellite offices in the diaspora to ease this flow of cash.

Head of Sales at Superior Homes Kenya Clive Ndege, connects the dots in this web. He says most Kenyans abroad are increasingly purchasing property directly, sometimes without any link to their relatives back home.

“Rather than remitting money to family members to invest on their behalf, many diaspora clients pay developers directly through international bank transfers,” he says. “These funds never flow through a recipient household in Kenya, and by definition, would not be captured in a survey measuring household remittance expenditure.” Ndege says this shift in how property is bought by the diaspora community has been informed by past sour experiences where a relative or friend back home would misuse the cash, which leads to no property at all or substandard work.

“While many arrangements worked well, others were marred by delayed projects, cost overruns, diversion of funds to other uses, disputes over ownership, or even outright fraud,” he says.

This explains why, while the report shows just 2.2 per cent of households invest the remittances in real estate, it also lists the sector among the top three employment fields of the recipients of the inflow. When remittance inflow was analysed by the economic activity of the recipients, the financial and insurance sector was the first, followed by real estate and agriculture third.

“The analysis revealed that remittance inflows were largely to recipients in the financial and insurance (14.9 per cent), real estate (13.6 per cent), and agriculture, forestry, and fishing (12.0 per cent) activities,” the report says.

Of the three sectors, real estate received the most inflows, in cash at Sh127.0 billion against the total Sh848.4 billion.

However, of the three, recipients in the financial services and insurance sectors received the most, in both cash and in kind, at Sh138.8 billion, followed by real estate at Sh127 billion and agriculture at Sh112 billion.

Of the three sectors, recipients in real estate receive the least in in-kind remittances, at Sh6 million, which implies that the relationship between the sender and receiver, as far as the inflow is concerned, is that of an investor and executor.

The report, however, while speaking of just 2.2 per cent being invested in the real estate sector, and 73.1 per cent in food and household goods, does not go further to determine if these uses are as specified by the sender of the cash or if it is as decided by the household.

More information about this could explain if some of the money meant for real estate ends up being used for food, education, or other uses, as earlier explained by Ndege. The report states that, except in 15.8 per cent of cases where it is the sender who decides how the remittances are used, in most cases, the recipients and their families have the leeway to decide how to use the same.

“This is an important realisation, since the recipients have the flexibility to prioritise use of the remittances in a way to maximise benefits as pertains to the circumstances at hand,” the report says.