Startup Grey seeks to ease diaspora remittance pain

Fintech startup Grey has announced its entry into the Kenyan market, setting sights on providing a seamless international money transfer service as it continues with its aggressive expansion spree in the greater East African region.

Founded in 2021, Grey is a Y-combinator-backed fintech firm that enables customers to have virtual international bank accounts and cards for free and enjoy smooth foreign payment processes.

Users can create a foreign USD, GBP, and EURO bank account for free, send money to the UK and Europe, and receive payments from over 88 countries.

“By using Grey’s advanced international money transfer solution, gig workers, digital nomads, and diasporas can now be there for their loved ones when it matters the most. With Grey, you can quickly and easily send and receive money across borders, playing a major role in improving financial prosperity and economic development for the region,” said the firm in a statement.

Kenya, like many other African nations, is highly reliant on diaspora remittance to prop up its economy. Money sent home by Kenyans living abroad has grown exponentially over the past decade.

The Central Bank conducted Kenya’s first Diaspora Remittances Survey which indicates that inflows to Kenya have increased tenfold in the last 15 years, reaching an all-time record of $4.027 billion (Ksh559.57 billion) in 2022.

This phenomenal growth points to the importance of remittances as a source of foreign exchange to the country, equivalent to more than 3% of the country’s GDP.

Kenya is now earning more foreign exchange from diaspora remittances than each of its major exports – coffee, tea, and horticulture – despite the persistent criticism of its poor diaspora policy.

When it comes to sending and receiving money from abroad, data indicates that poor exchange rates, high fees, and commissions may highly reduce the amount of funds received at the end of the transaction.

While the majority of Kenyans overseas send money home for household needs such as rent, education, and medical expenses, more people are sending money for long-term investments in sectors such as real estate, agriculture, and retail.

In recent years, investment companies have focused on linking Kenyans in the diaspora to local investment opportunities.

However, the cost of sending money back home is still a key barrier to the growing diaspora remittance. With this in mind, relaxing legal barriers and remittance costs will be crucial to the future growth of Kenya’s economy.

On average, Sub-Saharan Africa, including Kenya, is the most expensive region in the world to send remittances to.

According to a World Bank report, it costs 8.9 percent of the transfer value to send money into the region, compared to the global average of 6.8 percent.