Local firms chasing Kenyas ultra-rich diaspora community

Local firms have doubled down on their efforts to attract Kenya’s ultra-rich diaspora community as they increasingly view the segment as a source of new revenues.

Consequentially the home grown businesses have intensified their global reach to host rounds of cocktail and sponsored events world over with the view of lining their pockets with newly found capital.

“Most Kenyans living abroad want to have something for themselves back home. As such we are letting them know that Kenya has changed and that the political climate is now supportive of investments,” Optiven Group Chief Executive Officer George Wachiuri said.

First-movers to the space have already began reaping dividends from the cross-over as flows from the diaspora tap moves from strength to strength, year over year.

According to data from the Central Bank of Kenya (CBK), Kenyans living abroad sent back Ksh.237.4 billion in the first 10 months of 2019, up from Ksh.227.8 billion over the preceding year.

Diaspora remittances have maintained a growth trajectory at an annualized rate of 10 percent to see local companies take note.

According to Username Investment Chief Executive Officer Rueben Kimani, 30 percent of the company’s yearly revenues is now streaming from the diaspora to mirror the immense opportunities represented in Kenya’s global community.

“We have opened all our doors to the Diasporas since our first contact two years ago. Having visited the United States and Europe, our future plans are to spread our reach in Asia, Australia and the Rest of Africa,” he said.

Lenders like Equity Bank have meanwhile become the forerunners of the banking sector having supported the remittance of Ksh.100 billion in nine months to September to shove up the Group’s foreign exchange earnings through fees and commissions.

‘Easy money’

The lure of the diaspora has found anchoring in the lack of planned investments with companies tapping onto the gap to mobilize funds through real estate projects and diaspora tailored unit trusts which cover trades in the money markets, bonds and equities.

The tracking of remitted firms to specific areas of the economy has however been a tough ask there being no available data on the metrics. Nevertheless, firms have flipped the script to their advantage as they seek to bulk their holding in the over $2.5 billion yearly flows.

According to estimates, 70 percent of all remittances end up in welfare and consumption with relatives living abroad repatriating funds to lend a hand to family members back home.

“100 dollars out there can really mean a lot for someone living here in Kenya,” reckons Gichane Muraguri, a former diaspora community member and now a Director at Tangaza telecoms.

However, the very family members back home have at times proved to the thorn in the flesh of Kenyans living abroad as many suffer burnt fingers from in-house fraudulent schemes.

As such, many in the diaspora have taken up planned investments to mitigate risks having found more confidence in the legal backing of companies.

“Having been hurt by family members through deception, many have become more trusting of firms. This are entities you can sue,” Mr. Muraguri added.

Strings attached

Kenya’s diaspora community is estimated at three million individuals with the majority being drawn from foreign firms, multi-lateral institutions and academia.

The bulk of the remittance is drawn from Kenyans living in the North America with Europe representing the second top market by remittance volumes.

In spite of the retention of a double digit growth in repatriated funds, the Kenya Diaspora Alliance (KDA) reckons remittances can grow at an even faster pace through the leveraging of incentives.

“Remittances have not benefited from what foreign direct investments (FDIs) get. We would like to see the enactment of supportive measures such the matching of a dollar with another from government,” KDA Chairperson Shem Ochuodho said.

The diaspora community is expected to hold its annual home coming convention later this month with the State too eyeing a piece of the remittances pie in funding the economic transformation agenda.

Remittances have traditionally supported domestic incomes by Kenyans while providing for substantive foreign exchange inflows to embolden CBK’s exchange reserves which stood at an equivalent 5.5 months import cover at the end of November.