Engage more with Kenyans in diaspora to boost economy
Tuesday, May 28, 2019 21:00
By KIPRONO KITTONY |
In my seven years at the helm of the Kenya National Chamber of Commerce and Industry, one of the most exciting assignments I have undertaken is engaging Kenya’s Diaspora community during trade missions abroad. This is because of how strategically important the Diaspora community is to Kenya’s economic prospects.
Data from the Ministry of Foreign Affairs estimates that around three million Kenyans live abroad — that’s less than 10 percent of the country’s population of 45 million and about the same size as the country’s capital Nairobi, where approximately 3.5 million Kenyans live.
However, despite their number relative to the overall population, Kenyans living abroad are becoming increasingly instrumental to our economic performance.
Diaspora remittances have in the past few years featured prominently in the list of key forex earners in Kenya, right at the top with traditionally strong sectors such as tea, horticulture and tourism.
CBK data indicates that for the 12 months leading March 2019, Kenyans sent back Sh270 billion, a 26 percent year-on-year increase. In comparison, 2018 earnings from tourism came in at Sh120 billion, while horticulture, another key forex earner, brought in Sh153 billion.
Double digit year-on-year growth in remittances means that Kenyans are not only sending back larger amounts, but also likely doing so more frequently.
I was, for instance, fascinated to discover that around 80 percent of Kenyans abroad who celebrate Mother’s Day do so by sending money to their mums, according to a customer survey by London-based digital remittance firm WorldRemit.
As Kenyans living abroad pump in more money at a higher frequency into the local economy, we need to start thinking critically about deriving strategic value from remittances. The benefits of remittances to the economy are clear: They play a key role in increasing dollar inflows and strengthening the shilling.
This carries a host of benefits, especially considering how fast imports have galloped ahead of exports over the past 10 years, bringing the trade deficit as at December 2018 to Sh1.14 trillion, according to data from the CBK.
While remittances are a critical source of external financing, the cost of sending money is still high. This is also the case more broadly across the continent, where a World Bank report indicates that the cost of sending $200 (Sh20,000) to African countries is the highest at an average of 9.3 percent. This is in comparison to the seven percent global average.
Initiatives to lower the costs of remittances, such as investments in digital platforms that eliminate the need for expansive agent networks and transfer these cost savings to end-users, are the game-changers we need.
If we get remittances right, then we will be able to move to the next stage, which is creating a much broader and robust framework to promote diaspora participation in national development. Initiatives such as investment promotion targeting Kenyans living abroad cannot be fully effective if remittances are still too costly.
Most Kenyans living and working abroad have developed broad and diverse skillsets that could drive transformation back home.
The writer is the outgoing National Chairman of the Kenya National Chamber of Commerce and Industry.