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Diaspora (Commonwealth Union) _ The Kenyan government is gearing up to implement a series of incentives aimed at Kenyans living abroad, with the goal of increasing annual remittances to at least Sh1 trillion and bolstering the country’s foreign exchange reserves.
To achieve this ambitious target, the State Department for Diaspora Affairs (SDDA) plans to commission a consultant to conduct a baseline survey. This survey will inform the development of a comprehensive framework and tactical plan focused on enhancing remittances.
The SDDA aims to create a conducive environment and an enabling ecosystem to facilitate achieving the Sh1 trillion remittance target by 2027. The goal is to ensure a balanced distribution between remittances allocated for personal savings and those earmarked for investments.
Despite the significant growth in remittances over the past few years, reaching the targeted amount will require substantial efforts. Central Bank of Kenya (CBK) data indicates that remittances from Kenyans abroad averaged $3.56 billion over the last five years, with a four percent increase recorded last year, reaching $4.19 billion. To reach the Sh1 trillion target by 2027, annual remittances will need to grow by approximately 36 percent in the next four years.
Although the growth in remittances has been promising in recent years, there has been a slowdown in growth, particularly in inflows from Kenyans in the United States, who contribute nearly 60 percent of the total remittances. Despite retaining the largest share of remittances at 55.86 percent, the US saw only a marginal increase of 0.26 percent to $2.34 billion. Factors such as inflation and rising living costs in the US have impacted the disposable income available for remittances.
However, CBK Governor Kamau Thugge remains optimistic about continued growth in remittances from the US, citing a robust economy and strong job market.
Meanwhile, Saudi Arabia has emerged as a significant source of remittances to Kenya, surpassing the UK to become the second-largest contributor. This trend underscores the importance of exploring diverse destinations for job opportunities abroad to support remittance inflows.
