The government should develop policies to promote investment products to tap the growing inflows from Kenyans living abroad, analysts said, as official data captured the remittances at Sh44.73 billion in first three months of the year.
Fresh data from the Central Bank of Kenya shows the value of diaspora remittances rose by a modest 4.09 per cent during the first quarter of the year to Sh44.73 billion ($432.60 million) from Sh42.97 billion ($415.58 million) 12 months earlier.
“What we need to do is put diaspora remittances into an investment vehicle such as a diaspora bond that can benefit the general public by boosting the economy rather than the inflows just being sent back to relatives for construction and other personal investments,” Standard Investment Bank head of research Francis Mwangi told the Star on phone.
In the past three years, diaspora remittance has remained the country’s largest source of foreign exchange beating tea, coffee and horticulture exports as well as tourism.
“The government needs to think of more innovative ways to use diaspora remittances to boost the economic agenda,” Stanbic Bank regional economist Jibran Qureishi said yesterday.
Money sent home by Kenyans abroad is a key economic growth driver having increased its contribution to the gross domestic product by 2.5 per cent in October last year, the CBK data shows.
Kenya had a GDP of $69.97 billion (Sh7.34 trillion at the current exchange rate) in 2015 and per capita GDP was estimated at $1587 (Sh164,095.80 ).
While launching the inaugural diaspora investment conference in Nairobi in 2015, President Uhuru Kenyatta recognised the role of the diaspora in the country’s development and emphasised the need for the structuring of remittances.
“The main thrust must be to unlock and maximize the hitherto untapped promise of the diaspora and use this energy to carry our country to greater heights, while at the same time meeting the needs and expectations of Kenyans abroad at every point in time,” the Uhuru said on April 1, 2015.
Qureishi said the inflows can also be put into savings to boost the country’s national savings and enhance economic growth through capital formation. The inflows continue to show stable growth despite geopolitical uncertainties.
“What we are seeing is there hasn’t been a slowdown in cash inflows despite economic difficulties in some of the donor countries,” Qureishi said.