Kenya’s diaspora remittances have continued to grow with projections indicating a new record high for 2023 amid plans by the government to tap some of the money into capital market investments.
Figures from the Central Bank of Kenya (CBK) show that total money remitted in the 12 months to November 2023 hit a record $4.17 billion (Sh634 billion) up from $4.021 billion (Sh611 billion) in a similar period last year, rising 3.8 percent.
This was despite active efforts by the government to convert some of these monies into investments in the domestic equity and bond markets, as foreign investors fled the local bourse and foreign-currency bonds remained expensive.
Less than one percent of the remittance has been used to invest in financial market instruments such as bonds and shares, according to the Diaspora Remittances Survey published in January by the CBK.
It is, however, not clear whether the government sought to tap the remittances into investments at source, in which case the figures would have dropped gradually or at home, meaning remittance accounting would have not been impacted.
Abubakar Hassan, investment promotion Principal Secretary in April told a forum of Kenyan diaspora that his division had been “tasked to mobilise and convert at least 50 percent of the diaspora remittances into investment flows.”
The department, along with top capital markets officials, including Nairobi Securities Exchange and the Capital Markets Authority bosses, held a series of forums with diasporas to sensitise them on investment opportunities as part of the efforts to convert the remittances into investments.
This was followed by the launch of DhowCSD, an online portal by the CBK meant to improve seamless investment in government securities from any part of the world.
These measures came as the Nairobi bourse suffered massive foreign investor flight, occasioned by a depreciating shilling against the dollar and rising interest rates in developed economies.
Total foreign investor outflows from the stock market between January and September 2023 reached Sh18.95 billion ($120.7 million).
At the same time, African governments have been struggling to raise finance from the international bond markets due to high rates, which had forced Kenya to cancel a planned $1 billion Eurobond in June last year.
