Kenyans abroad sent home $215.6 million (Sh21.6 billion) in August, pushing the annual diaspora remittance to a new high of $2.5 billion or Sh255 billion.
Latest data from Central Bank of Kenya shows the monthly average inflows sustained an upward trend, rising to $212 million (Sh21.2 billion) in the 12 months to August 2018 from $150 million (Sh15 billion) over a similar period in 2017, representing 41.3 per cent growth.
The 12 months cumulative inflows to August 2018 on other hand grew by 41.9 per cent to Sh255 billion from Sh179.7 billion last year, this, perhaps as a result of extended tax amnesty given to diaspora investors to voluntarily repatriate foreign held assets.
According to Kenya Revenue Authority, the tax holiday issued in July last year under Section 27B of the Tax Procedures Act was meant to provide a one-off opportunity for Kenyan residents to declare assets and income and voluntarily repatriate the foreign-held assets to Kenya and invest in development of the country. Although Treasury had placed a deadline of June 30, CS Henry Rotich while presenting 2018-19 budget extended the amnesty by a further one year to encourage more diaspora investors to take up the offer.
CBK Weekly bulletin for the week ended October 26 show Kenyans living in North America especially US sent home the lion’s share, commanding 51.6 per cent of total remittance, followed by those in Europe at 33.2 per cent while the rest accounted for 15.2 per cent.
Kenya recorded the highest ever diaspora inflows of Sh26.6 billion in June, with those in US leading at Sh13 billion followed by Europe at Sh8.4 billion while Kenyans in the rest of the world sent home a record Sh5.1 billion. CBK attributed the growth in remittance to digital banking products targeting diaspora market. “The which have brought down the cost of money transfers. It is also explained by the uptake of new financial products,” CBK said in its weekly bulletin.
Last year, diaspora remittances were Kenya’s highest foreign exchange earner at Sh197 billion, overtaking tea earning which rose to Sh129 billion from Sh120 billion the previous year. Tourism sector earned Sh120 billion but coffee earnings continue to dwindle.
Last week during ABSA’s Africa Financial Market Index that ranked Kenya third in the continent, participants challenged capital market players in the country to find a way of taping into tap into rich diaspora cash. Absa group head of markets George Asante asked Kenya to consider developing innovative capital market products targeting diaspora niche, giving diaspora bond as an example. Kenya has been toying with the diaspora bond idea for two years now.