Diaspora cash up 36 per cent as remittance costs decline

Remittances by Kenyans living abroad increased 36 per cent in the nine months ended September  compared to a similar period last year.

The inflows rose from Sh54.7 billion ($643,772m) to Sh74.4 billion ($876,306m) on what the Central Bank of Kenya (CBK) attributed to reduced remittance costs and better data collection methods.

“The factors explaining the relative increase in remittances include improved data collection techniques due to proper classification of remittances data by commercial banks,” said the banking sector regulator.

However, remittances dipped 2.4 per cent month-on-month from August’s Sh8.058 billion ($94.8m) to Sh7.86 billion ($92.5m) in September due to a marginal reduction in inflows from the European region, CBK said.

Help relatives

Kenyans abroad have been sending money to help their relatives at home and for investing in real estate projects among others investments.

More recently, CBK said Kenyans living abroad have also started investing in government securities such as infrastructure bonds and the savings bonds.
The Central Bank also said that mobile phone companies’ partnership with international money transfer players such as Western Union has made it cheaper and more convenient to send money back home.

“We expect that remittances will continue to rise as the US economy continues to get out of the 2008 recession because the largest percentage of remittances comes from the US,” said Fred Mueni, the managing director of Tsavo Securities.

The World Bank last year launched a data base showing the prices of sending money using various service providers that resulted in slight price cuts.

The Bank says transaction costs amount to an average of upto 10 per cent of the total money sent at any point. Its data shows that 54 per cent of Diaspora remittances are sent mainly via electronic fund transfers followed by cheques, account to account, bank drafts and mobile money.