Kenya diaspora remits $101m after money transfer costs dropBy RAWLINGS OTINI in Nairobi | Wednesday, July 11 2012 at 10:11
Kenyans in the diaspora sent home $101 million (Sh8.3 billion) in the month of May, representing a 47 per cent increase compared to a similar month in 2011.
The Central Bank of Kenya (CBK) said lower money transfer costs, increased data collection and declining economic prospects in developed markets helped to improve the inflows.
For instance, yields on short term debt in Kenya earn up to 10 per cent compared to about two per cent in the developed markets.
The cost of money transfer has gone down in the last one year on stiff competition after the World Bank launched a price comparison platform last year, targeting to reduce the high prices.
Remittances are one of the main sources of foreign exchange for Kenya alongside tea, horticulture and tourism.
The May inflows rose 4.6 per cent from April, when Kenya received $95.6 million from its citizens abroad.
CBK said North America remained the top source of remittances, accounting for 51.2 per cent of the inflows in May, followed by Europe at 27.9 per cent.
Those from the rest of the world, however, dipped by 2.9 per cent in May.
The Central Bank attributed the increase in inflows to reduced transaction charges for money transfer services due to increased competition, and the convenience of sending money by mobile phones.
Kenyans living abroad send money home to help their families and to invest. Of late, majority of people have focused on real estate.
CBK says Kenyans in the diaspora have recently started investing in government securities such as infrastructure bonds.
Cumulatively, they sent home $496.7 (Sh41.2 billion) million in the first five months of this year compared to $334.7 million (Sh27.7 billion) in the same period last year.
The central bank said there were improved data collection techniques and proper classification of remittances by commercial banks and aggressive marketing of investment opportunities to people living in foreign countries.
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