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Shift in Remittance uses

10 Aug

A couple of weeks back I looked at the Kenyan stock exchange and how investing in it could have positive impacts on the economy in general.

According to a recent report by Safari Africa, Kenyans living abroad have recently shifted the use of cash sent home as remittances from the traditional consumption to heavily investing in NSE, Government security bounds and the real estate sector.
The opening up of investment opportunities to citizens by the Government plus the rapid growth and the revolution brought about by mobile money transfer is probably one the reasons for the increase in remittance inflow and more investments established in the country.

As a result, remittances have booked a second place among other main sources of foreign exchange in East Africa’s biggest economy, alongside tea, horticulture and tourism therefore playing a key role in our economy.

Just a quick look at what the figures are currently looking like: Data from the Central Bank of Kenya (CBK) indicates that diaspora remittances hit about 50 billion shillings ($596 million) in the first six months of 2012 up from 34.14 billion shillings ($406. million) sent in a similar period in 2011 .This marks a 47 percent rise in the first six months of 2012.

This all thanks to governments’ aggressive campaign to encourage the Diaspora community to give back to the society by investing in government securities among other things

The campaign is also in a bid to tap remittance inflows in to the country into the formal economy where it’s easier to quantify and utilize for the nation’s good.

I think with such an  increase in remittances to the country, it is important for government to provide recipients with many options to put their money to change the idea that the money is only for consumption. It looks like there has been a gradual shift behind the reasoning behind sending money to Kenya. Initially the idea was just for survival and  day to to day sustenance of families back home in Kenya.  However now the the focus should start shifting to investment into the country’s economy and Infrastructure.

The only way remittances will truly make a difference in the long-term fortunes of Kenya is if these funds are directly channeled by their recipients towards investment or some form of income-generation.

 
 

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