AUG 14 - For Kenyans in the diaspora, the desire to contribute to the growth and development of their country is evidenced by the $4.3 billion they remitted into the country in 2023, up from $4 billion the previous year, according to data from the Central Bank of Kenya. Kenyans in the diaspora have sent larger amounts of money in tandem with the increasing number of citizens in the diaspora.
According to the diaspora remittance survey (CBK-2001) the key reasons for sending money by Kenyan diaspora are: Household, Medical educational expenses. Hence, a significant proportion of the transfers are for living expenses. Hence, the need for cheaper faster transfer costs to enhance the amounts that the final recipients receive.
As for investments the diaspora is aware of Real Estate, stock Market and Saccos. Investment in real estate is the leading destination for the funds. Additionally, in recent years Kenyan Financial and real estate institutions have marketed opportunities in these sectors to the diaspora community in Europe and North America.
A recent Commonwealth report titled, charting a Course for Diaspora Investment in Kenya, indicates that 61% of diaspora Kenyans would remit more for investment, but are deterred by various barriers. These barriers are such as: lack of information on savings/investment opportunities and lack of trust or knowledge of reliable investment partners.
Kenyans would like to remit more, invest and get more investment options. What are some of the investment options that can bridge this gap? Treasury bills, government bonds, corporate bonds and shares, for example, offer attractive, but underexplored, opportunities for long-term wealth accumulation and portfolio diversification, especially when pursued through unit trust funds.
Unit trust funds, such as those offered by the Old Mutual Investment Group, present investors with a range of risk profiles that are tailored to their individual goals and timelines, spanning conservative, moderate, or aggressive investment strategies. The channel provides a flexible, accessible, and vastly secure means of growing wealth, with the added benefit of allowing investors to borrow against their investments, further enhancing its utility and versatility.
Government through the Central Bank of Kenya has pioneered the DhowCSD platform to enable Kenyans invest in Treasury Bills and Bonds from anywhere in or out of the country. Banks, Saccos and real estate firms have travelled to regions with high numbers of Kenyans to pitch Kenyan Investments.
More still needs to be done to provide diaspora investors with the financial literacy and legal safeguards that will increase their trust in making their investment decisions. For a step-change, it is important to establish transparent processes, robust governance structures, and mechanisms for accountability to help instill confidence among diaspora investors. Providing access to reputable financial advisors and ensuring regulatory compliance will further enhance credibility and mitigate concerns about fraud or mismanagement.
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Finally, it is important to restate that harnessing the full potential of diaspora investments demands proactive measures to bridge the information gap and foster trust in the financial ecosystem. By diversifying investment options available, exploring innovative fund remittance avenues, and a transparent and regulated sector Kenya, as a whole, can unlock new sources of capital for sustainable development and economic prosperity.
The writer is the Head of Research at the Old Mutual Investment Group
