Kenyans in the diaspora continue to play a pivotal role in the economic growth of their homeland, as evidenced by the $4.3 billion they remitted in 2023, a noticeable increase from the $4 billion remitted the previous year. According to data from the Central Bank of Kenya (CBK), this trend reflects the growing number of Kenyans living abroad and their strong desire to contribute to the development of their country.
The Main Motives Behind Remittances
The diaspora remittance survey conducted by CBK in 2001 identified the primary reasons Kenyans abroad send money back home: household needs, medical expenses, and educational costs. A significant portion of these remittances are used to cover living expenses, emphasizing the necessity for cheaper and faster transfer options that ensure recipients receive the maximum amount possible.
Investment Preferences of the Kenyan Diaspora
Kenyan expatriates are increasingly looking to expand their investment portfolios beyond immediate family needs. Real estate, the stock market, and Savings and Credit Cooperative Organizations (Saccos) are among the preferred investment avenues. Real estate, in particular, remains the top choice, fueled by aggressive marketing from Kenyan financial and real estate institutions targeting diaspora communities in Europe and North America.
Barriers to Investment
Despite their eagerness to invest more, diaspora Kenyans face several obstacles. A recent report by the Commonwealth, “Charting a Course for Diaspora Investment in Kenya,” revealed that 61% of diaspora Kenyans would remit more for investment if not for various barriers, such as a lack of information on savings and investment opportunities, and a lack of trust or knowledge about reliable investment partners.
Exploring New Investment Avenues
To bridge this gap, several underexplored investment options can be highlighted for the diaspora. Treasury bills, government bonds, corporate bonds, and shares offer attractive opportunities for long-term wealth accumulation and portfolio diversification. Unit trust funds, like those provided by the Old Mutual Investment Group, present investors with a range of risk profiles tailored to their individual goals and timelines, from conservative to aggressive strategies. These funds offer flexibility and accessibility, allowing investors to borrow against their investments, enhancing their utility and versatility.
Innovations in Investment Accessibility
The Kenyan government, through the Central Bank of Kenya, has introduced the DhowCSD platform, enabling Kenyans to invest in Treasury Bills and Bonds from anywhere in the world. This platform represents a significant step forward in making investment in Kenya’s financial instruments more accessible to the diaspora. Additionally, Kenyan banks, Saccos, and real estate firms have been proactive in visiting regions with high concentrations of Kenyans to promote investment opportunities back home.
Building Trust and Financial Literacy
To truly unlock the potential of diaspora investments, it is crucial to enhance financial literacy and provide legal safeguards that increase trust in investment decisions. Establishing transparent processes, robust governance structures, and accountability mechanisms will help instill confidence among diaspora investors. Access to reputable financial advisors and adherence to regulatory compliance will further enhance credibility and mitigate concerns about fraud or mismanagement.
Conclusion
Harnessing the full potential of diaspora investments requires proactive measures to bridge the information gap and foster trust in Kenya’s financial ecosystem. By diversifying the investment options available, exploring innovative remittance avenues, and maintaining a transparent and regulated sector, Kenya can unlock new sources of capital for sustainable development and economic prosperity. With the right strategies in place, the Kenyan diaspora can continue to be a vital contributor to the nation’s growth and development, ensuring a brighter future for all.
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