collaborative kenya logo2Kenyans working abroad sent home Ksh11 billion last month, an amount which can make a huge impact in the economy.

The diaspora community at a conference urged the government to set up fund to shield them from foreign currency losses incurred when sending money to increase the inflows which have been growing in the recent years.

“We are estimating the total remittances were $2 billion with $1.2 billion having been through unofficial channels,” said Mr. Henry Rotich, the National Treasury Cabinet Secretary.

Hawala, popular in the Middle East and parts of Asia, is the most common unofficial channel of sending money into the country.

The Central Bank now requires all businesses used to remit money into the country to be licensed by it to help keep track of the cash and ensure the country is not used for money laundering or financial terrorism.

Forex Bureaus have also been banned from engaging in the remittance business with CBK requiring them to acquire money remittance provider licenses.

The cost of sending money into the country was cited as an impediment by the diaspora community. The government promised to start offering incentives.

Commercial banks have been jostling to have a greater share of the remittances which offer cheap source of funds and exchange commissions.

The cost of sending cash in the country is estimated at 9.2 per cent of the value of the transfer, higher than the global average of 8.96 percent of the funds being remitted.

CBK hopes that increased competition among financial institutions will result in lower remittance fees.

Diaspora remittances has been key in supporting the shilling following rise into Kenya’s fourth largest foreign currency earner.