Companies across different sectors are developing more products targeting billions from abroad, investment analysts have said.
Inflows
from the diaspora hit a record Sh143.30 billion ($1.382 billion) in
nine months to September, Sh10.88 billion ($105 million) more than a
similar period a year earlier.
Analysts see growth in
remittances in the short to medium term, spurred by higher returns on
investment locally compared to Kenya’s largest sources, the United
States and Europe.
“There is nothing cyclical in the
growth (this year). It is down to efforts of government and corporates
trying to set up diaspora products,” said Churchill Ogutu, a senior
research analyst at Genghis Capital.
Three quarters of the remittances go into consumption, according to estimates by Kenya Diaspora Alliance (KDA).
KDA
global chairman Shem Ochuodho said the inflows could rise to $4
billion-$5 billion annually in five years if investment incentives such
as tax rebates are extended to citizens abroad.
That
may see at least a third of the inflows go into productive sectors, Dr
Ochuodho said, adding KDA’s investment arm, the Diaspora Investment
Club, plans to form a limited company which will become a Public-Private
Partnership vehicle with national and county governments.
The
trust, which says it represents 41 associations in different countries
with about 250,000 members, has written to Foreign Affairs ministry,
some counties and the Kenya Private Sector Alliance on strategy to grow
diaspora investment.
“If they are prepared to work
with the diaspora…we could see the 25 per cent that go into investments
and savings increase to at least 30 per cent,” Dr Ochuodho said.
Fund
managers are the latest to join commercial banks with a number having
or being in the process of coming up with investment instruments such as
unit trusts tailored for the diaspora.
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