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Representatives of Kenyans living abroad want new controlled policies to allow them aggressively invest in government securities to boost inflows in remittances.

They are concerned that increasing global inflationary pressures may hurt their disposable income and the ability to send money back home.

Cliff Mobeck of the Diaspora Youth Caucus has called for the proposed diaspora department in the Ministry of Foreign Affairs, to come up with proper guidelines to tap the constituency.

This will attract more Kenyans in the Diaspora to put their money in long term investment vehicles like the treasury bonds in a bid to enhance their incomes.

Proactive approach

“Even as they contribute meaningfully in terms of remittances, the government can take a proactive approach to address their social, economic and political welfare. The government also needs to find a way of encouraging Kenyans to diversify investments beyond the black tax,” said Mobeck.

Black tax is the financial support young Africans feel obligated to extend to their families in the form of support. When migrants send home part of their earnings in the form of either cash or goods to support their families, known popularly as diaspora remittances. Such financial inflows have been growing rapidly in the past few years and now represent the largest source of foreign income for many developing countries including Kenya included.

Central Bank of Kenya (CBK) data shows that diaspora remittances from the US fell by a monthly average of three per cent this year, reflecting the sharp cost of living in that country which has cut the disposable income available to Kenyans for support of relatives back home.

The CBK breakdown of remittances by source country showed in August that inflows from the country fell to Sh21.9 billion from Sh26.5 billion in December last year – with the dip in inflows tied to the jump in US inflation, presently at 8.26 per cent.

The inflation in the US stood at 8.52 per cent last month and 5.25 per cent last year, higher than the long-term average of 3.26 per cent for the nation that remains the largest source of remittances into Kenya, accounting for 57 per cent in May 2022.

Failure to come up with such strategies quickly means that diaspora remittances risk further decline after transfers from the United States fell for the first time this year due to inflation birthed from the war in Ukraine.

“Kenyans in Europe and United States can easily make Sh1 million and most of them are limited to only buying land and building houses, mostly residential. Buying land through real estate/land-buying firms, and letting it sit there is locking money,” argued Silas Nyanchwani, Diaspora Youth Focus Kenyan Representative.