Up to the late 20th Century, whenever a Kenyan went abroad to study and work, more often than not, that person was counted as a loss for the village and the community they came from. Communication was a tall order and remitting money for development in your own village was almost unheard of. But thanks to technology, all that is changed and what worries people now is how fast and safely can one send money from Laramie in Wyoming, USA to Kitale in Trans Nzoia County if that’s what they want to do.
Kenyans abroad remitted US$ 891.1 million (KES 7.49 billion) into the country in 2011 alone. Simply put, that is a lot of money. These figures tell it all; there is a market in Diaspora remittances and financial institutions are not sleeping on the idea.
Strategists in every financial institution in the country are eyeing this growing inflow of cash. According to Central Bank of Kenya statistics, remittances have grown 119% to US$ 891.1 million (KES 7.49 billion) in 2011 from US$ 407.6 million (KES) 3.42 billion in 2006 .
In June 2012, remittances to Kenya amounted to US$ 99.5 million (KES 8.358 billion) compared to US$ 101 million recorded in May 2012, representing a 1.5% decline. However, compared to June 2011, remittances inflows increased by 38.4%. In the year to June 2012, total remittances inflow stood at US$ 596.2 million (KES 50.88 billion), 46.7% higher than the total remittances of US$ 406.5 million in the year to June 2011.
Formal remittance channels
Initially, CBK used to record very low remittances. This is because people working abroad were not sending money back home through formal channels. The upward trend in inflows has been attributed to reduced charges for money transfer transactions. Developments in technology, especially the mobile phone platform has resulted to increased convenience in sending traceable money via the mobile phone.
The CBK’s decision to revise its investment procedures in 2011, allowing Kenyans abroad to trade in government securities encouraged more Kenyans to remit money for investment in the country.
Services
In the recent days more services have come up that will make it easier for Kenyans living and working abroad to send money back home or transfer funds at lower rates and more conveniently. Apart from the traditional bank transfers which are time consuming and expensive, and Western Union money transfer several other platforms have come up, all targeting the loot from abroad.
Nation Media Group in partnership with Diamond Trust Bank recently launched a money transfer service dubbed NationHela. The international money transfer platform allows users to send and receive money from anywhere in the world. The service allows one to send and receive money to a NationHela prepaid Visa card and mobile phone.
Barclays Bank is set to launch a mobile money transfer platform in the country this week. The service dubbed Pingit, which is already operational in the UK is targeting the money Kenyans send into the country from the UK.
Other products and services that have been designed to take care of the Diaspora market niche include M-Pesa services from the UK and KCB Diaspora banking service. Jamii Bora Bank has also joined the growing list of institutions that are tapping into the diaspora remittances market. KCB Bank and Jamii Bora have signed a partnership that will see the banks act as agents for Western Union transfer services.
Opportunity
Despite entry of many players in the diaspora money business, there still is a great opportunity for channel developments. According to World Bank statistics the number of Kenyans living abroad is estimated at 457,100 people and is continuously on the rise.
CBK reports that in 2009, remittances from Kenyans working abroad amounted to US$ 609.2 million (KES 51.2 billion). World Bank reports show that total workers’ remittances amounted to US$ 631 million (KES 53 billion). This is evidence that there is an additional KES 1.8 billion that is remitted through informal ways.
Banks and other innovators have an opportunity in the current KES 53 billion market. More innovative products, safer, faster and more convenient developments to help Kenyans remit money could just be the trick.