Looking for a bargain in diaspora remittance-Victor Oloo

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Looking for a bargain in diaspora remittance-Victor Oloo

Victor Oloo can hardly imagine a life without money from his siblings living broad. The youthful filmmaker has four sisters and one brother who are in the diaspora — four in the US and one in Europe.

The eldest of his siblings moved to the US in early 1990s while Mr Oloo was still a child.

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His sister set the precedent for the rest of the family — consistently sending money back home — to support her family and eventually, to help pay for her brother’s education.

“I owe them my university education. They all chipped in and paid for my degree,” he says. His university training, he notes, has helped him develop his budding film business — Chromatic Pictures.  He also has a younger brother at Strathmore University whose education is subsidised by diaspora remittances.

Mr Oloo’s story is told a million times across the country. The Central Bank of Kenya (CBK) indicates that diaspora remittances into Kenya hit Sh50 billion in the first six months this year.

Last year, the amount was Sh75 billion — rivalling tea, coffee and tourism industries in earning foreign exchange.

In a 2010 paper, University of Nairobi economist Joy Kiiru notes that 80 per cent of the remittances are used for basic household consumption while the remainder is invested in education, health and better nutrition.

For many families, diaspora remittances mean that there may be dinner on their table, school fees for their children or medical support for the sick relatives.

“I decided to leave my daughter with her grandmother in Kenya. If I sent money, I know she will eat well,” Ms Mercy Mutinda told Money on a phone interview from New York.

Getting money to relatives, however, is not always an easy and straightforward task.

According to the World Bank’s ‘Remittance Prices Worldwide’ database, Africa is the most expensive region in the world to send money to.

The cost of wiring money to Africa is 12 per cent of the amount being send on average, compared to a 9 per cent global mean.

A number of Kenyan firms have recently stepped up their efforts fill this gap.

Financial institutions, telecom firms and media houses are partnering with traditional money transfer companies to roll out new products targeted at the diaspora.

“Five years ago, I had to go to town (Nairobi Central Business District) to find a Western Union or Money Gram outlet. Today, I can get the money on my phone,” he says.

“These companies have simply seen an opportunity to make money. However, it is the Kenyans living abroad and their relatives back home who stand to benefit,” said Mr John Maina, diaspora affairs advisor at the office of the Prime Minister.

Today, Money profiles six of the international money transfer systems available to Kenyans.

 

Western Union has more than 590 agent locations locally having partnered with Diamond Trust Bank (DTB), Equity Bank, Imperial Bank, Kenya Commercial Bank and Post Bank.

Last month, Jamii Bora Bank signed a sub-agency deal with KCB to carry out Western Union transactions.

Although Western Union claims to have no upper limit on the amount of funds that can be transferred, certain dollar amounts may require additional documentation beyond a government-issued identification.

The fees charged is determined by the sender’s location with respect to the receiver, the amount send and the speed with which one wants the money received.

Using Western Union’s online cost estimator, Money found that it would cost between Sh670 ($8) and Sh980 ($11) to send Sh8,400 ($100) from the US to Kenya.

Sending Sh13,600 (£100) from the United Kingdom to Kenya will attract Sh1,340 (£9.80) fee while sending money from Kenya to Uganda and vice versa will cost two per cent of the principal.

Money Gram

Money Gram has about 284,000 agents internationally. In Kenya, the service provider has partnered with Co-operative Bank, Diamond Trust Bank, Equity Bank, Imperial Bank, K-Rep Bank, Post Bank, National Bank, Chase Bank and Consolidated Bank.

Although the upper limit on translatable sums has not been explicitly stated in the company’s terms and conditions, an online calculator that estimates the cost of sending money would not accept amounts above Sh800,000 ($10,000) between Kenya and the US.

The fee for transferring Sh8,400 ($100) from the US to Kenya is Sh839 ($9.99).

Meanwhile, the charge of transferring Sh13,600 (£100) from the UK to Kenya is Sh683 (£4.99).

Until December this year, money send to Uganda from Kenya will be charged Sh110 fee for the first Sh6,500.

Any amount above that will costs 1.75 per cent of the principal. Transfers from Kenya to the rest of the world will be charged a minimum Sh350 fee and Sh20,000 for amounts above Sh600,000.

NationHela

Nation Media Group and Diamond Trust Bank’s new money transfer service brings together payment card and the mobile money technology.

NationHela is a pre-paid Visa card whose recipients of remittances in Kenya can purchase from various supermarkets and DTB agents across the country.

NationHela holders do not need to have a bank account. The pre-paid account is anchored on their mobile numbers.

Funds are transferred directly to the account by any debit or credit card user across the world.

Source:nation.co.ke/

 

 

 

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