How Kenya Plans to Net Sh1trn From The Diaspora
The authorities are devising initiatives aimed at encouraging Kenyans living abroad to increase their remittances, to reach a minimum of Sh1 trillion annually. This effort is intended to enhance the country’s foreign exchange reserves.
As a result, the State Department for Diaspora Affairs (SDDA) is seeking a consultant to perform a foundational survey. This survey will guide the creation of a framework and strategic plan aimed at improving remittance processes.
“This assignment is intended to assist SDDA in establishing a conducive environment and an enabling ecosystem, which will help achieve the target of Sh1 trillion in annual remittances by 2027 and at the same time achieve an equitable spread between remittances for personal savings and investments,” said SDDA in a tender document.
Over the past five years, the average remittances from Kenyan expatriates, who reside and work abroad, amounted to $3.56 billion (equivalent to Sh568.67 billion). Last year, these remittances experienced a four percent growth, reaching $4.19 billion (approximately Sh642.44 billion), as reported by the Central Bank of Kenya (CBK) data.
The annual remittances must increase by approximately 36 percent over the next four years to reach the desired goal of Sh1 trillion per year by 2027, as represented by the Sh642.44 billion.
According to CBK data, there has been a 50.2 percent increase in growth over the last four years, rising from $2.79 billion (Sh446.05 billion) at the close of 2019 to the performance recorded last year. This significant growth makes the department’s target appear achievable even before the planned interventions.
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The State Department will express worry over the fact that the previous year witnessed a diminished expansion in diaspora funds, primarily due to the leveling off or decrease in remittances from Kenyan individuals in the United States, constituting nearly 60 percent of the total sum.
Although the United States, which oversees 55.86 percent of all remittances, experienced a slight increase of 0.26 percent, reaching $2.34 billion (Sh373.2 billion).
Over the past three years, the largest global economy has been grappling with elevated food prices, leading to increased costs in rent, medical care, and the prices of both cars and car insurance.
Rising inflation has impacted workers’ earnings, diminishing the disposable income that Kenyans residing in the country rely on to support their families and dependents abroad.
Nonetheless, Kamau Thugge, the CBK governor, expressed on the previous Wednesday his anticipation for a sustained increase in US remittances.
“The US seems to have a fairly strong economy at the moment. The job market is fairly strong and so we expect continued growth of the remittances from the US,” said Dr Thugge.
Saudi Arabia has become a primary focus for President William Ruto in his quest for overseas employment opportunities. In the previous year, it surpassed the United Kingdom to become Kenya’s second-largest contributor to remittances.
How Kenya Plans to Net Sh1trn From The Diaspora