Business

State targets Sh1 trillion annual remittance boost from diaspora

Former Central Bank of Kenya (CBK) Governor Patrick Njoroge displays some of the new look Kenya shillings on June 3, 2019, during a press conference at his office in Nairobi. (Photo: Simon Maina/AFP)

By Bashir Mohammed | Monday, February 12, 2024

The State Department for Diaspora Affairs has announced plans to conduct a baseline survey, seeking a consultant to develop a framework and tactical plan for enhancing remittances.

The Kenyan government aims to boost annual remittances to a staggering Sh1 trillion by 2027 by unveiling a series of incentives targeting its diaspora community, to bolster the nation's foreign exchange reserves.

The State Department for Diaspora Affairs (SDDA) has announced plans to conduct a baseline survey, seeking a consultant to develop a framework and tactical plan for enhancing remittances.

Keep reading

“This assignment is intended to assist SDDA in establishing a conducive environment and an enabling ecosystem, which will help achieve the target of Sh1 trillion in annual remittances by 2027 and at the same time achieve an equitable spread between remittances for personal savings and investments,” stated the SDDA in a tender document.

Recent data from the Central Bank of Kenya (CBK) reveals that remittances from Kenyans abroad have averaged $3.56 billion (Sh568.67 billion) over the last five years. The figure grew by four per cent last year, reaching $4.19 billion (Sh642.44 billion), indicating a need for 36 per cent growth in the next four years to meet the ambitious target.

Despite the apparent challenge, the CBK data indicates a growth of 50.2 per cent in the past four years, making the government's goal seem achievable even before the planned interventions.

However, concerns arise as last year witnessed a softened growth in diaspora inflows, particularly due to flattening or reduced remittances from Kenyans in the United States, who contribute nearly 60 per cent of the total amount.

While the United States remains the dominant contributor, posting a marginal 0.26 per cent rise to $2.34 billion (Sh373.2 billion) last year, CBK Governor Kamau Thugge remains optimistic about the future. He stated, “The US seems to have a fairly strong economy at the moment. The job market is fairly strong, and so we expect continued growth of the remittances from the US.”

In a surprising development, Saudi Arabia has overtaken the UK as the second-largest source of remittances into Kenya, further emphasising the evolving landscape of global remittances for the country.