National

State eyes Sh1 trillion from Kenyans in diaspora in 3 years

Directline is said to control more than 60 per cent of the public service vehicles (PSVs) insurance market. (Photo: File)

By Ibrahim Omar | Friday, February 9, 2024

Diaspora remittances have grown rapidly in recent years to become the country’s main source of foreign exchange, surpassing domestic exports such as tea, coffee and flowers, as well as tourism.

The government is planning to increase remittances from Kenyans living abroad to Sh1 trillion annually within the next 3 years.

In 2023, total diaspora remittances amounted to $4.19 billion (Sh670.4 billion), up from $4.03 billion (Sh644.8) in 2022, according to data from the Central Bank of Kenya (CBK).

Keep reading

In a notice published on Friday, the State Department for Diaspora Affairs said the government wants to sharply increase remittances - by more than Sh329.6 billion - by 2027.

The department noted that the diaspora has enormous potential for skills, knowledge, and technology transfer, as well as savings, investment and remittances, hence the need for targeted investment in their rights and welfare via concerted efforts by the government and the private sector.

“The State Department further recognises the imperative to, among other initiatives, strategically incentivize remittances towards achieving the Sh1 trillion target in annual remittances by 2027, in line with the Bottom-Up Economic Transformation Agenda (BETA),” it said.

The department, in line with its mandate, is seeking to establish a conducive environment and an enabling ecosystem to help achieve that target and an equitable spread between remittances for personal savings and investments.

It is planning a baseline survey to develop a framework and tactical plan for enhancing remittances. This will enable it to understand current practices and behaviours of the Kenyan diaspora and map current channels used by the diaspora.

The survey will also capture the expectations and unfulfilled needs of the Kenyan diaspora, and map policies, taxes, fee structures, and available instruments, contrasting them with those in countries that attract high remittances from their diaspora.

Diaspora remittances have grown rapidly in recent years to become the country’s main source of foreign exchange, surpassing domestic exports such as tea, coffee and flowers, as well as tourism.

Further, the government is set to introduce an innovative US dollar bond that will enable Kenyans living in the diaspora to invest back home. The bond will be structured by the World Bank's Multilateral Investment Guarantee Agency (MIGA) and the National Treasury.

The US is the largest source of diaspora remittances into Kenya, controlling about 55.86 per cent of the total inflows, due to the huge number of Kenyans living there.

However, disbursements by Kenyans living in African countries became the fastest-growing source of the diaspora's dollar inflows last year.

Cash wired home by Kenyans in other countries on the continent climbed by nearly half to $305.21 million (about Sh48.83 billion under prevailing conversion rates) in 2023 compared to the year before, official data shows.