Attractive investment options can unlock more diaspora funds

The Kenyan diaspora has tremendous potential to bring in more remittance inflow if all factors are spruced in creating an enabling environment for investment.

Kenya, just like any other country, has a good number of her citizens living in other countries or continents, estimated to be around three million or slightly more.

They are mostly professionals in specialised fields like medicine, accountancy and audit, legal, banking and education, among others. Estimates reflect at least 80 per cent are in the employment sector while the remaining are students.

This means that close to 10 per cent of the population is making a living beyond Kenya’s territory or undertaking their university education.

Looking at the 2014 numbers derived from the Kenya National Bureau of Statistics, we note the diaspora remittance contributed around three per cent of the total gross domestic product (GDP), reflecting a wide gap when compared with the other sectors, with agriculture leading at 27 per cent, manufacturing (10 per cent) , real estate (7.8 per cent), wholesale and retail (8.2 per cent), among other sectors. Tourism is not worth mentioning here as it is lingering on a single digit.

The latest statistics on diaspora remittance by the Central Bank of Kenya (CBK) for June shows an improved amount of Sh13.6 billion was remitted back home.

This was 17.1 per cent rise from last year’s Sh11.6 billion and is attributed to increased inflows from Europe and North America.

The June figures are also 5.3 per cent higher than the May remittances which stood at Sh12.9 billion. Of significant note is that inflows from North America accounted for close to half the amount. The 12-month cumulative inflows to June increased by 10 per cent to Sh149.2 billion from Sh135.7 billion in the year to June 2014.

The 12 months average flow also sustained an upward trend to Sh12.4 billion from Sh11.3 billion during the same period.

The month-on-month increase presents hope for the shaky shilling which has maintained its weakness against the dollar, staying above the Sh100 mark for the past month. One wonders whether this could be the maximum potential of the Kenyans abroad or can it be more?

Mathematically, it would mean that; on average a Kenyan living in the diaspora sends around Sh5,054 ($50) in a month.

This is derived from taking the latest inflow remittance which was Sh13.6 billion and dividing with the estimated three million Kenyans abroad.

The Sh5,054 per person is ridiculously very low. It is for this reason, I have been asking myself what could be inhibiting them from sending more?

If approximately 80 per cent of the diaspora population is working, it means a majority are either sending a paltry amount or not sending at all.

Normally, the majority of Kenyans abroad send money to their families and relatives to supplement their income or to cater for other needs and emergencies like medical bills, school fees and general consumption.

Sometimes people send it out of guilt, sometimes it is because the relatives keep calling and asking for money.

Out of this, it is clear to see that the diaspora has no major attraction that pushes them to send more money or to invest locally.

To grow the current state of remittance, there is need to make the country more favourable to attract more investment. We are dealing with three million Kenyans, most of whom are highly educated and exposed to other continents’ lifestyle and investment opportunities.

They do lots of research before investing into a home or in stocks and shares. Consider the example of our national airline Kenya Airways which has made a whooping Sh25 billion loss and is on the verge of collapse.

Would the diaspora invest in shares in this company? What if a home in South Africa costs half the amount of a home in Kenya, then wouldn’t they opt to buy one in South Africa or elsewhere much cheaper?

We must offer competitive investment opportunities at home, with the right market pricing, conducive environment and legislation. We must make the investment climate attractive to everyone and why not begin with the diaspora.

Now, if we achieved this objective and the monthly remittance per individual increased to Sh10,109 ($100) a month, then this would mean the inflow would double to Sh27.2 billion if we took the June Sh13.6 billion figure.

I would put our expectation at Sh25,000 ($250) per person per month which would take our monthly inflow to Sh68 billion. Would this not have a significant effect on our exchequer?

The Obama visit is a boost to the diaspora in the US and we should see more interest arising from that region. Kenya was on the spotlight all over the world and showcased herself at one of the highest level seen here at home.

Everything seems to have worked perfectly well for Kenya during the visit amidst the potential fear of an Al- Shabaab attack.

One of the many factors that the government should also consider to increase the inflows from the diaspora is to build good relationship with this community.

In the past, we have seen the diaspora seeking legal action to protect their rights. Fundamental rights like voting in Kenya’s election cannot be overlooked.

There should therefore be a round table discussion on how this process can be carried out with both parties coming to an understanding.

This will raise the confidence of the diaspora community in the government as they will have the right to participate in deciding the destiny of their country.

More remittance could also be experienced through showcasing the products and investment opportunities available locally.

Following the recent conclusion of the Global Entrepreneurship Summit where individuals and firms showcased their ideas and products, it is important to advertise these products to the Kenyans abroad so they can identify any business idea that lacks funding and grab the available opportunity. This could benefit the entrepreneurs and offer a good return on investment for the diaspora.

From the case put forward and figures highlighted in this discussion, we can conclusively agree that if we positively put our mind and efforts to address these challenges we can break the barriers and bridge the gap in increasing our diaspora remittance. I believe yes we can.

Dias is the Group chief executive officer, FAPCL Group. Email: [email protected]