This means the sector can play a more robust role in the economy if favourable measures are put in place.
Financial and legal hurdles have been cited as the stumbling block to the realisation of the huge potential of remittances. Analysts say the government should create an enabling environment by for instance offering tax breaks to encourage Kenyans living abroad to invest locally.
“The diaspora is a key component of Kenya Inc and one senses the government had an epiphany a while back. The diaspora is the biggest single source of foreign exchange for Kenya,” said Nairobi-based analyst and CEO of Rich Management, Aly Khan Satchu.
“I am surprised that we have not launched a government of Kenya diaspora bond. However, I am now seeing much more structure and architecture around creating the right investment opportunities for the diaspora.”
Echoing Mr Satchu’s sentiments, a Kenyan diplomat based in Europe told Smart Company there is an urgent need for the government to create formal investment avenues to enable Kenyans in the diaspora invest back home.
“In light of the vast opportunity diaspora offers, it is perhaps time we considered reviewing the tax treatment of diaspora cash remittances and investments, by granting them export status as we do for tourism,” said the senior official who sought anonymity.
“Diaspora investment represents an ‘invisible export’ that fully deserves this status. Other nations give refunds to tourists for taxes they may have paid on purchase of goods,” she added.
She said the diaspora likes the Kenyan brands and thus should be the focus of exports.
Experts say if the government and private sector invested the same diplomatic and financial resources in tapping diaspora opportunity as they do for instance in the regional markets, the returns would be phenomenal.
Diaspora, they say would become one of the most effective catalysts for Kenya’s socio-economic transformation.
Banks and money transfer operators have in the past 10 years rushed to tap the lucrative diaspora remittances segment with innovative mobile money products.
According to a World Bank report, Kenya is among the highest recipients of remittances in Africa. In 2015, Kenyans in diaspora sent home a record $1.6 billion (Sh163 billion) in remittances.
The report, Migration and Remittances Fact book 2016, further notes that of the World Bank’s 188 member countries, Nigeria was the highest recipient in Africa having received $20 billion (Sh2.04 trillion) in remittances.
Ghana was second with $2 billion (Sh200 billion) while Kenya and Senegal came third with $1.6 billion each.
But while cash remittances remain significant at an estimated $1.6 billion in 2015, arguably the largest source of forex inflows, experts say a deeper appreciation of diaspora potential should push the country to re-evaluate national policy priorities and put it at the core of national aspirations such as Vision 2030.
“Diaspora is key to government and a full desk is in the Office of President. CBK also does mention diaspora inflows in its monthly economic bulletin as a source of foreign reserves and the Cabinet Secretary under Labour is promoting Kenyans to get jobs outside,” Value Directors Limited CEO Kariithi Murimi Murage told Smart Company.
“TT increase diaspora earnings we should focus on better high value jobs and high consulting services.”
A survey of the profile of Kenyans abroad done by Cooperative Bank indicates that majority of the diaspora estimated at over one million are aged between 21 and 50 years.
They are employees or self-employed, with incomes ranging between Sh100,000 and Sh2 million a month, the lender said last week after it launched a service centre dedicated to serve diaspora clients, the first of its kind in Kenya.
The unit is meant to give Kenyans abroad including diaspora saccos a one-stop shop for banking needs.
The significant impact of remittances to the economy has seen the government elevate the diaspora affairs section to a full directorate status at the Ministry of Foreign Affairs and International Trade.
To back it up, the first ever Kenya Diaspora Policy was launched at the inaugural Diaspora Investment Conference hosted by the government in April last year. These developments make engagements with Kenyans abroad much easier for local businesses the embassies abroad. Previous engagements with Kenyans abroad were haphazard.
Experts say majority of Kenyans working abroad desire to retire back in the country, and therefore work on Retirement Plans, some with help of formal financial advisers but the majority remain in the informal systems.
This presents a huge opportunity for licensed financial advisors to craft appropriate retirement plans for the
This is also an opportunity for State run Fund National Social Security Fund (NSSF) to engage especially the thousands of young Kenyans being employed abroad. Experts say NSSF could liaise with Diaspora Saccos to help recruit members.
The National Heal Insurance Fund (NHIF) could also tap the diaspora opportunities.
The diaspora have dependents back here at home who need health coverage, as opposed to the common practice of wiring money for harambees to settle hospital bills.