Money Markets
Total remittances which were handled by 45 banks and money transfer
agents for August stood at Sh11.3 billion. PHOTO | FILE | NATION MEDIA
GROUP
By CHARLES MWANIKI
In Summary
A 22.4 per cent month-on-month rise in diaspora
remittances from the US lifted the transfers to a record Sh11.34 billion
($128.8 million) in the month of August providing a measure of comfort
to the Kenya shilling.
Latest data from the Central Bank shows overall
month-on-month diaspora remittances increased by 10 per cent or Sh1
billion between July and August. Compared to August 2013, remittances
last month represented an increase of 20.3 per cent.
US remittances in August topped Sh5.63 billion ($64
million), the highest monthly figure this year, while those from Europe
and the rest of the world came to Sh2.78 billion ($31.5 million) and
Sh2.93 billion ($33.3 million) respectively.
CBK governor Njuguna Ndung’u described the
remittances as “encouraging outcome” coming at a time when hard currency
inflows into the country have been hit by lower tourist numbers arising
from security concerns and reduced earnings from tea and horticulture.
Cumulatively, the remittances in the eight months to August 2014 stood
at Sh82.5 billion, compared to Sh73.8 billion over a similar period last
year.
Kenyans living abroad usually send money home to
support their families and for investment in various sectors, mainly
real estate. Incidentally, the rise coincided with a climb at the
Nairobi Securities Exchange.
Total remittances for 2013 stood at Sh110 billion
($1.3 billion) and the 2014 total looks set to eclipse this going by the
month-on-month increases registered so far this year.
Seven banks — CfC Stanbic, Chase Bank, Cooperative
Bank, Equity, KCB, DTB, and NIC — handled 65 per cent of the total
remittances for August. The Central Bank listed a total of 45 banks and
money transfer agents, including Safaricom M-Pesa which accounted for
Sh576.6 million worth of remittances.
The increasing remittances will also make encouraging news for the Treasury which is preparing to issue a diaspora bond.
Treasury cabinet secretary Henry Rotich told the Business Daily
in an interview earlier this month that the government intends to tap
Kenyans living abroad for a diaspora bond to be issued by the end of
next June, coming in the wake of the successful $2 billion (Sh178
billion) Eurobond issue that was oversubscribed four times.
The Treasury has started structuring the debt paper
but Mr Rotich did not give details of its size, tenure and return. The
issue will be shilling-denominated, translating to lower foreign
currency exposure.
“Instead of remitting cash to relatives, the
Kenyans abroad can instruct us to pay the interest from the bond
directly to the relatives,” he said.
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