CBK eyes Diaspora inflows

December 15, 2008
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, NAIROBI, Kenya, Dec 15 – The government is in the process of developing incentives to encourage and harness more Diaspora inflows.

Central Bank of Kenya (CBK) Governor Prof Njuguna Ndung’u revealed on Monday that they want to borrow from the best models in the world and offer inducements such as Diaspora Bonds and attractive investment climate to stimulate the remittances.

“The government is currently putting in place deliberate strategies with Diaspora associations to develop robust programs aimed at tapping into Kenyan talents abroad,” he told participants at the Annual Diaspora Dialogue and Conference in Nairobi.

Prof Ndungu said Kenya could learn from experiences from India where the State Bank uses (Diaspora) bonds to finance its balance of payments requirements while Portuguese banks have tailor-made services such as special accounts for their nationals residing abroad.

“Pakistani banks offer accounts in foreign currency to emigrants while Morocco has established joint checking accounts with a local bank with branches abroad which allows the Diaspora to deposit funds and for recipients in their home country to withdraw at minimal costs,” he highlighted.

The CBK boss added that these were some of the models that the committees in the National Economic and Social Council would look at to attract more investments.

Last year, Kenya received about Sh117 billion in remittances although the CBK estimates that the figure could be much higher as inflows through informal means were not captured.

Experts estimate that the inflows from the Diaspora are invested in real estates, human capital and household consumptions.

Citing Safaricom’s Initial Public Offer early this year and the expected festive season, Prof Ndung’u predicted that this year’s inflows would surpass those recorded in 2007.

The Governor said putting in places policies that ensures the improvement of remittances would help the country achieve its goal of increasing the national savings levels from the current 17 percent to 30 percent as envisaged in the Vision 2030.

He said they also want to formalize the channels such as good platforms through which Kenyans living abroad who are estimated to be about two million, can adequately participate in the Capital Markets and eventually contribute to economic development in the country.

Prof Ndung’u relayed that they also want to encourage banks to lower the cost of money transfer processes and reduce barriers to entry in order to enhance Diaspora investment.

A participant at the same conference, Prof Muroki Mwaura who is lecturing at the Kenya Methodist University said the government should employ measures such as setting up a Centre of Diaspora Studies and organising networking associations forums to improve the channels of sharing knowledge and expertise with Kenyan institutions.

“There is a major vacuum in the realm of information exchange and this needs to be addressed urgently,” he reckoned.

He quoted studies which show that African immigrants have the highest level of education attainment in the United States compared to other groups such as Asians, Europeans and Latin Americans and pointed out that Africa’s economies could benefit from this knowledge.

“African immigrants to the US are a source of modern technology that Africa can tap,” Prof Mwaura added.

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