Kenya’s diaspora remittances exhibit a consistent upward trajectory, with projections indicating a potential record high in 2023, as reported by the Central Bank of Kenya (CBK).
Remittances for the 12 months leading up to November 2023 totaled KES 634.0 billion (equivalent to USD 4.2 billion), reflecting a 3.8% increase from the previous year’s KES 611 billion (equivalent to USD 4.0 billion).
Despite governmental efforts to direct a portion of these remittances into domestic capital market investments, only a minimal fraction, less than one percent, has been utilized for financial market instruments such as bonds and shares.
The government’s strategy, whether aimed at accessing remittances directly for investments at the source or encouraging in-country investment without a direct impact on remittance accounting, remains unclear.
Abubakar Hassan, the Principal Secretary for Investment Promotion, announced in April that his division had been tasked with mobilizing and converting at least 50.0% of diaspora remittances into investment flows.
Collaborating with officials from capital markets entities, including the Nairobi Securities Exchange and the Capital Markets Authority, the government conducted forums with the diaspora to raise awareness about investment opportunities.
To facilitate these efforts, the CBK launched DhowCSD, an online portal designed to enhance seamless investment in government securities from any part of the world. These initiatives occurred amid a backdrop of significant foreign investor flight from the Nairobi bourse, triggered by a weakening shilling against the dollar and rising interest rates in developed economies.
In 2023, the stock market recorded higher foreign investor outflows compared to inflows, resulting in a net outflow position of USD 296.3 million, surpassing the net outflows of USD 204.3 million recorded in 2022.
Remittances, defined as money sent by individuals in foreign lands to their home countries, are now recognized as a substantial contributor to the country’s growth and development due to the significant sums involved.