An increase in the volume of cash remitted by Kenyans working or living abroad has attracted the attention of local and international banks, telecommunication and money transfer firms; all keen to cash-in on this growing segment of the market.
Most of the money sent by about half a million Kenyans living in the Diaspora, according to the World Bank, is used to fund investment projects, a move that has attracted local companies, especially in the banking sector.
While the main sources of diaspora remittances to Kenya are from Europe and the United States, Kenyan’s living in other African countries are also attracting interest from Pan African Banks such as West African-based Ecobank Group.
“Most Kenyans in the diaspora have higher incomes by virtue of their responsibilities outside the country. They also have a higher saving affinity since most prefer to invest back home,” Robin Wangome, Remittances and Diaspora Manager at Ecobank Kenya told AFKInsider.
Remittances form a good source of deposits and non-funded income and revenue for commercial banks, Wangome added. Using its RapidTransfer money transfer service, for instance, Ecobank Group is able to channel remittances into Kenya from all the 35 countries in which the bank operates in Africa.
“RapidTransfer accounts for 60 percent of all remittances from these (35) countries to Kenya. The flow comes from businessmen operating in these countries, parents paying school fees and upkeep for their children studying in universities and colleges in Kenya and Kenyans working for various international organizations especially in West, Central and East Africa,” said Wangome.
RapidTransfer clients usually take advantage of Ecobank’s wide footprint that comprises over 1,200 branches which allows transfers of up to $10,000 per transaction.
However, Ecobank isn’t enjoying the slice of diaspora remittances alone.
“We have partnered with SWIFT to enable customers send cash back home,” David Wayiera, an officer at Kenya’s Standard Chartered Bank’s consumer banking division told AFKInsider.
Almost all the major commercial banks have either partnered with other correspondent banks in Europe, US and Asia or set up their own infrastructure, to tap into diaspora remittances.
Kenya Commercial Bank (KCB) for instance boasts Diaspora Banking, a product targeting East Africans living overseas while Equity Bank, Kenya’s largest bank by customer base, has Equity Direct which allows Kenyans in the UK to send cash back home to any of the bank’s branches.
With Equity bank expanding its network in Europe, Barclays has been encouraging its customers to open US dollar accounts, to enable remittances.
Boosting Import Demand
“With a reduction in foreign exchange earnings from traditional exports like coffee and tea, diaspora remittances are now a major contributor to foreign exchange,” Kariithi Murimi, patron of Kenya Institute of Credit Management told AFK Insider.
“For commercial banks, the more remittances through their system, the higher their capacity to service import demands of their clients.”
Apart from banks and worldwide money remitting services such as MoneyGram and Western Union other non-traditional players are tapping into the lucrative remittances business. Such include: telecoms giant, Safaricom, Nation Media Group and CIC Insurance among others.
The diaspora remittances business has attracted the attention of Kenya’s monetary authority – Central Bank of Kenya (CBK) – which has already put in place the regulatory framework to monitor cross boarder money trasfere activity.
Money Remittance Regulations have already been formulated, creating the necessary legal framework for licensing of stand-alone money remittances providers.
Kenya’s Vision 2030, the government’s national policy blue print, recognizes the role played by diaspora remittances in national development and therefore highlights diaspora remittances as one of the flagship projects under the financial sector.
The Bank Supervision Annual Report, 2013 by the Central Bank encourages transparency, reduction of barriers and lowering of the cost of sending and receiving money.
Remittances to Kenya have increased 16 per cent in 2013, according to the county’s central bank, boosted by the growth in remittances through electronic platforms like Western Union and M-Pesa.
- afkinsider.com
