For Kenyans in the diaspora, the desire to contribute to the growth and development of their country is evidenced by the $4.3 billion they remitted into the country in 2023, up from $4 billion the previous year, according to Central Bank of Kenya (CBK) data.
Kenyans in the diaspora have sent larger amounts of money in tandem with the increasing number of citizens abroad.
According to the diaspora remittance survey, a significant proportion of the transfers are for living expenses, hence the need for cheaper, faster transfer costs to enhance the amounts that the final recipients receive.
As for investments, the real estate is the leading destination for the funds followed by the stock market and saccos. Kenyan financial and real estate institutions have been marketed opportunities in these sectors to the diaspora community in Europe and North America.
A recent Commonwealth report titled Charting a Course for Diaspora Investment in Kenya, indicates that 61 percent of diaspora Kenyans would remit more for investment, but are deterred by various barriers. These include lack of information on savings/investment opportunities and lack of trust or knowledge of reliable investment partners.
What are some of the investment options that can bridge this gap? Treasury bills, government bonds, corporate bonds and shares, for example, offer attractive, but underexplored, opportunities for long-term wealth accumulation and portfolio diversification, especially when pursued through unit trust funds.
Unit trust funds present investors with a range of risk profiles that are tailored to their individual goals and timelines, spanning conservative, moderate, or aggressive investment strategies. The channel provides a flexible, accessible, and vastly secure means of growing wealth.
The government through CBK has pioneered the DhowCSD platform to enable Kenyans invest in Treasury bills and bonds from anywhere in or out of the country.
More still needs to be done to provide diaspora investors with the financial literacy and legal safeguards that will increase their trust in making their investment decisions. It is important to establish transparent processes, robust governance structures, and mechanisms for accountability to help instil confidence among diaspora investors. Providing access to reputable financial advisors and ensuring regulatory compliance will further enhance credibility and mitigate concerns about fraud or mismanagement.
Harnessing the full potential of diaspora investments demands proactive measures to bridge the information gap and foster trust in the financial ecosystem. By diversifying investment options, exploring innovative fund remittance avenues, and a transparent and regulated sector Kenya, as a whole, can unlock new sources of capital for sustainable development and economic prosperity.
The writer is the head of Research at the Old Mutual Investment Group.
