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Diaspora remittances show that a little bit goes a long way

Diaspora remittances have overtaken revenue from tea, coffee, and tourism as the top foreign exchange earner.

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I was starting an MBA that I hoped would catapult my career to the next level, but it came at a sacrifice. As I built my career in the UK, I missed birthdays and weddings, graduations and funerals.

Coming home just once a year, it was easy to miss out on special occasions, so sending small amounts of money became one of the central ways to stay involved in the life of my family and friends.

Even as a student, I began sending small sums like £100 for special occasions, but nearly 10% of that money went to fees. After landing a job in London following my graduation, I began to send more money to invest in a farm just outside Nairobi.

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These experiences are by no means unique to me — they are shared by over 3 million Kenyans in the diaspora who send staggering amounts of money home each year.

Family support

People in the diaspora often share similar stories about their motivations to move abroad, with creating opportunities for their children and providing support for family at home nearing the top of the list.

International Day of Family Remittances, celebrated on June 16, recognizes the significant financial contributions of workers, living and working away from home.

In 2018, Kenyans in the diaspora deserve to be celebrated more than ever. A decade ago, Kenyans abroad sent home $645 million. Today, the World Bank now estimates that Kenya receives nearly $2 billion in remittances annually — a nearly 200% increase in ten years.

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We are currently the 4th largest remittance recipient in Africa and, according to the Central Bank of Kenya, diaspora remittances have overtaken revenue from tea, coffee, and tourism as the top foreign exchange earner.

Local agents

Living in Southwest London ten years ago, I struggled to find local agents where I could send money home to Kenya.

Instead, I spent many a lunch break rushing to the ATM before joining a long queue alongside Kenyans and Nigerians, Indians and Filipinos also hoping to send money home.

When I sent money to my parents in Nairobi, they, in turn, had to brave the traffic to find an agent or bank branch to pick up the funds. Sending money to my grandmother, who lives in a rural village outside Eldoret, was even more complex affair.

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As an elderly woman without a car, she had to hitch a ride to the nearest town to pick up the money.

But if it was tough for those picking up the funds, for those sending the pain of seeing money disappear into fees was also acute: sending $500 per month over a decade would rack up over $1300 in fees or almost a full year of tuition at the University of Nairobi.

M-Pesa

However, today, contributions from the diaspora are increasing not only because there are greater numbers of Kenyans abroad, but also because digital tools are improving the way people are  sending and receiving payments. Mobile money has played a huge role in that story.

Since M-Pesa first launched in 2008, over 36 million mobile money accounts are now registered across the country, making Kenya the pioneer in digital payments not just on the African continent but globally.

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It also makes us the leader in mobile-based remittances. Today, transfers to mobile are growing by 52% annually. Even when mobile money cash-out fees are considered, sending money by services like M-Pesa or Airtel Money, for example, is still 21 per cent cheaper on average to send $200 than with traditional remittances channels, and 36 per cent cheaper to send $50.

In short, the digital revolution means the money being sent home goes further, and there is more available invest in the things that make a difference to families across Kenya whether it be school fees or entrepreneurial ventures.

Diaspora remittances

What is clear too, is that our country’s success is down the harambee spirit not just in Kenya, but also those living abroad too. As Kenya attempts to grow its GDP 10 percentage points by 2030, diaspora remittances will no doubt help us reach that ambitious goal.

Remittances can cover the cost of school fees of Kenya’s future engineers and doctors or purchase farmland to help support our budding avocado industry.

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Now, having returned home, I see firsthand the ways that little sums of money can make a big difference.

Our country’s reputation as the economic engine of East Africa is due to the hard work of those at home, but is also directly linked to the role that Kenyans abroad play in proudly giving back to their country and their families.

Sharon Kinyanjui is Head of East Africa at WorldRemit, a leading digital money transfer company.

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