Remittance is money sent by a person in a foreign land to his or her home country. Due to the huge sums involved, remittances are now being recognised as an important contributor to the country’s growth and development.
The Central Bank of Kenya conducts a survey on remittance inflows every month through formal channels that include commercial banks and other authorised international remittances service providers in Kenya.
As Kenyans migrate to other countries in search of greener pastures, and for studies, they are keen to send back some money out of what they earn, either doing odd jobs or from the stipend they receive in school.
The developed nations are known to have a better valued currency, hence even a small amount of money from abroad, when sent home, has a much higher value.
The popular destinations are USA, United Kingdom and Europe, Middle East nations, including United Arab Emirates, Australia, among other nations.
HUGE SUMS REMITTED
According to data collated by the Central Bank of Kenya, in May alone, some Sh25.49 million was sent back home from abroad. North America alone sent over half, at Sh12.34 million, Europe sent Sh8.5 million and the rest of the world sent Sh4.6 million. This year to May, according to CBK, over Sh111.8 million has been sent back home. Obviously, these monies are not being remitted back home for domestic uses. The people abroad are now looking to invest in projects that can benefit them.
Not only does the diaspora community have potential to invest, it also has knowledge, expertise and experience that could be deployed in enabling private sector investment, according to research on humanities and social sciences done by University of Nairobi.
HOW FUNDS ARE USED
The studies, titled Emigration and Remittance Utilisation in Kenya, done in 2015, indicated over half of the remittances, at 54.2 per cent, were used for household consumption.
Education expenses took 23 per cent and 12 per cent of diaspora inflow was used for investment, while health took six per cent.
The remittances can be associated with increased household investments in education and business, all of which are seen to have high social returns for local recipients.
The studies raised an issue on policies and initiatives to address UN development goals, since remittances are a positive outcome of migration and should be counted in poverty reduction initiatives.
The studies conclude that there is need for an instrument at the national level to enable and sustain Kenyan-diaspora led investments into the country.