Diaspora inflows rise 42pc to hit Sh268bn

Cash sent home by Kenyans abroad rose 39.54 percent in 12 months through October helped by increasing investment vehicles and a tax amnesty.
The inflows hit $2.61 billion (Sh267.75 billion) in the period compared with $1.87 billion (Sh191.88 billion) a year earlier, the Central Bank of Kenya (CBK) reported.
The steady rise in remittances, analysts said, is largely informed by a growth in investment products targeting the diaspora community and an extended tax pardon for Kenyans who repatriate wealth stashed in foreign countries.
RELATED CONTENT

• Diaspora remittances to East Africa on the rise
• Diaspora forex inflows up 51 per cent in five months
• Diaspora remittances hit a new monthly record
• Diaspora inflows to stabilise currency as US economy grows

Between January and October this year, the cash sent by Kenyans living and working in foreign countries amounted to $2.23 billion (Sh228.92 billion), a 42.48 per cent jump over $1.57 billion (Sh160.66 billion) in the same period in 2017.
The 10-month inflows surpassed the $1.95 billion (Sh199.50 billion) sent back home in the whole of 2017 by Sh29.42 billion, the CBK data based on transactions through official channels such as banks and cash transfer firms show.
“Inward remittance flows remained resilient and amounted to $219 million (Sh22.46 billion) in October 2018, which was 18 percent higher than in October 2017,” CBK said in its weekly bulletin.
“North America, Europe and the rest of the world accounted for 50 percent, 32 percent and 18 percent, respectively of the total remittance in October 2018.”
It is conservatively estimated that about three-quarters of Kenya’s diaspora remittances go to charities and family support obligations such as medical bills, food and school fees.
“Remittances have been a silver bullet for many African countries and now outpace FDI (foreign direct investments) (foreign) Aid and any other source of hard currency you care to mention,” said Aly-Khan Satchu, an investment analyst who runs advisory Rich Management.
“A 40 percent year-on-year expansion is startling and the number might have been flattered a little by the ‘(tax) amnesty’. Nevertheless, remittances remain a ‘sweet spot’ and it’s underpinning the shilling.”

The stupid Moi policies that messed up the economy caused a huge number of Kenyans to leave,
Now it looks like it was a blessing in disguise..

Depending on relatives in USA to as the top FoReX earner is just plain stupid and unsustainable. While Tea and Coffee exports are 60% down since the 1980's.
Export of Goods and Services is a much better strategy, locals get jobs,farmers get income and the economy thrives.
Most of This "relatives" money goes to Real estate which is also having trouble itself, malls are empty and no one is taking mortagages..

Mkikuyu- Akili timamu said:

Depending on relatives in USA to as the top FoReX earner is just plain stupid and unsustainable. While Tea and Coffee exports are 60% down since the 1980's.
Export of Goods and Services is a much better strategy, locals get jobs,farmers get income and the economy thrives.
Most of This "relatives" money goes to Real estate which is also having trouble itself, malls are empty and no one is taking mortagages..

Click to expand...

😳😳😳
1.No one said we are depending on it, it's one of the many Forex earners.
2.And get your facts right, only Coffee exports have fallen, Tea exports have been on the rise.

vulcan said:

😳😳😳
1.No one said we are depending on it, it's one of the many Forex earners.
2.And get your facts right, only Coffee exports have fallen, Tea exports have been on the rise.

Click to expand...

Remittances are now number 1 top forex earner. So in this context, this is the most important Forex earner in kenya closely followed by tea coffe and tourism. Its 1/3 of all forex! very significat and should it not come the shilling tumbles by 1/3.
Boss tea was booming in the 80's until moi killed it and bought himself a presidential Jet. Farmers scaled down, nyayo tea estates in abadares hills,mt kenya and Mau collapsed.
You either must be very young or never set foot in kenya,

Mkikuyu- Akili timamu said:

Remittances are now number 1 top forex earner. So in this context, this is the most important Forex earner in kenya closely followed by tea coffe and tourism. Its 1/3 of all forex! very significat and should it not come the shilling tumbles by 1/3.
Boss tea was booming in the 80's until moi killed it and bought himself a presidential Jet. Farmers scaled down, nyayo tea estates in abadares hills,mt kenya and Mau collapsed.
You either must be very young or never set foot in kenya,

Click to expand...

You are the one who is a bit naive, Moi destroyed the coffee industry not Tea, Coffee production in the country has been falling since early 90s... i come from a Tea/coffee growing area.. we uprooted coffee and planted tea,macadamia,avocadoes etc
Coffee is the one that was booming in the 80s and early 90s..

In fact in 2016 Kenya earned the highest revenue of any tea producing nation in Africa.

Kenya is the 3rd largest producer of Tea In the world

I very well know what am talking about.
It's good to get your facts right or even admit when you are wrong. That should be easy but when your main aim is to spread propaganda then you can't be helped..

Tea Production statistics - East African Tea Trade Association

Hongera diaspora wetu. Wabeba mabox wa majirani vipi hawatumi chochote nyumbani.

Mkikuyu- Akili timamu said:

Depending on relatives in USA to as the top FoReX earner is just plain stupid and unsustainable. While Tea and Coffee exports are 60% down since the 1980's.
Export of Goods and Services is a much better strategy, locals get jobs,farmers get income and the economy thrives.
Most of This "relatives" money goes to Real estate which is also having trouble itself, malls are empty and no one is taking mortagages..

Click to expand...

Seriously whats wrong with this idiot?

KENPAULITE said:

Seriously whats wrong with this idiot?

Click to expand...

this guy is a border-line educated fool, and he claims to be an economist

vulcan said:

this guy is a border-line educated fool, and he claims to be an economist

Click to expand...

Lets compare to our usual neighbours

https://www.google.com/url?sa=t&sou...CBAB&usg=AOvVaw1xbS7kpIyoCHOYqrnplbqc&ampcf=1

Tanzania diáspora remittances, currently averaging $400 million per annum, is less than 1 percent of the African’s total remittances (about $65 billion of remittances came to Africa in 2017 according to the recent data by the African Institute for Remittances).

Our remittance level is also less than 1 percent of the country’s Gross Domestic Product (GDP), for some countries such as Liberia, remittances accounted for 25 per cent of the GDP, Togo at 9 per cent, Mali at 7 per cent, Nigeria at 6 percent and so is for Ethiopia, Kenya, Ghana – this is according to the African Institute for Remittances.

And so, remittances are becoming an increasingly important component of external finance for developing countries in general, and LDCs (Least Developed Countries) in particular. According to the recent World Investment Report for 2018, issued this July by the United Nations Conference on Trade and Development (UNCTAD), global remittances were only surpassed by Foreign Direct Investments (FDIs) as a source of external financing for developing countries.

Global remittances, at $466 billion in 2017 (an increase by 8.5 per cent over $429 billion recorded in 2016), exceeded other major sources of external finance such as: Portfolio investments (which stood at $420 billion), Overseas Development Assistance (ODA), at $190 billion as well as long-term and short-term loans (private and public), at $240 billion.

According to UCTAD data, which are based on the World Bank Development Indicators and IMF World Economic Dataset; between 2013 and 2017 – sources of external finance for developing economies were: FDIs averaging 39 per cent; remittances; 24 per cent; portfolio investments 18 per cent; ODA 11 per cent and other investments (loans) averaged 9 per cent.

For Africa, remittances in flow for 2017 were $65 billion, while total Foreign Direct Investments (FDIs) inflows to Africa for 2017 was $42 billion (down from $53 billion in 2016). Of course, among the major contributors are Nigeria, accounting for one third of the total remittances into Africa, at $22 billion, followed by Egypt whose contribution is also almost one third, at $20 billion).

These facts from the data indicates the relevance of remittance continuously becoming an increasing source of finances for investment and development in the continent, and for us.

Even for us, the trend continues to look good, according to the Bank of Tanzania, remittances by Tanzanians in diaspora for the past five years were as follows: $382 million in 2013; $390 million in 2014; $387 in 2015; $403 million in 2016 and $403 million in 2017.

What remains true, for most of our countries, is the failure on finding the best way in which we can equate the effectiveness of remittance to formally finance our development. Facts of matters are, FDIs and portfolio equity are relatively expensive types of external sources of finance (because they typically require a higher rate of return). Furthermore, short and long-term debts are relatively cheaper, but interest payments have to be made regularly – which becomes a challenge sometimes for the country’s liquidity, foreign currency reserve and pressure on exchange rates during repayments of principal and interests.

On the other hand, remittances which by nature do not create liability in the country’s balance sheet and hence doesn’t constrain us as such, remains predominantly spent on household consumptions, with limited investment in productive assets.

So, the question remain, how can we make remittances prominent as a significant source of external finance to formally finance businesses enterprises and development projects? I have some views:

I am of the opinion that as a country so far there has not been significant tangibly benefits from the diaspora both economically, financially and in other aspects, relative to other countries as we have seen in the data above.

We therefore may need to clearly define the role of diaspora in our socio-economic development process.

Once defined, it could be followed by sensitizing and encouraging Tanzanians living abroad to invest back home. At the same time, we need to create a conducive environment and financial instruments designed to facilitate diaspora investments.

This may include creation of special savings instruments such issuances of a diaspora bonds targeted at financing specific projects such as road, railway, airport, irrigation infrastructure, etc -- like what Ethiopians did.

We may also consider finding solution to the reduction of cost for remittances as well as securitization of remittances.

We are informed by the Diaspora Council of Tanzanians in America (DICOTA) that the diaspora community in the United States have founded a US-based Tanzanian Diaspora private equity management firm, named Azania Capital Partners LLC that intends to manage funds mobilized, to among others, investing in financial instruments for economic development back home.

These funds may be channeled into productive business enterprises and other development projects here in the homeland.

I hope this can be replicated to others. However, such initiatives need to be complimented by clear pro-active efforts from this end i.e. creating financial instruments that will tap into such funds for our shared common development