Kenya Launches Plan to Lower Remittance Costs, Boost Volume

NAIROBI, Xinhua: Kenya unveiled a strategy plan on Monday that aims to lower the costs of remittances sent by its diaspora and increase the volume of money flowing back to the country.

Prime Cabinet Secretary Musalia Mudavadi emphasized the crucial role that Kenyans abroad play in the local economy. “Kenyans abroad make direct investments locally, providing social support or creating an enabling environment for Kenyan exports. Their contribution is evident in various sectors of the economy, including education, health, housing, agriculture, tourism and trade,” he said during the launch of the three-year strategic plan in Nairobi, the capital of Kenya.

Mudavadi, who also serves as the cabinet secretary for foreign and diaspora affairs, highlighted the need for discussions focused on lowering the expenses associated with sending money from members of the diaspora back to their countries of origin.

He said that the government aims to reduce these costs to 3 percent of the transfer value, aligning with the United Nations Sustainable Development Goal 10 (c), which seeks to make remittance fees more affordable.

“The remittance costs remain high despite calls for reduction. For the viability of social benefits portability, the transaction costs must be reduced. I therefore encourage all stakeholders to join together, in Kenya, regionally, and globally, to bring the costs of remittances to the global target,” he added.

According to Mudavadi, Kenya’s diaspora remittances grew to 2.8 billion U.S. dollars from January to July 2024, compared to 2.4 billion dollars during a similar period in 2023.

He said a review of the trend for the first seven months of 2024 indicates a projected increase in annual remittances from 4.19 billion dollars in 2023 to 4.8 billion dollars in 2024, marking a 14.6 percent increase.

Mudavadi said the exponential growth puts the country on track toward attaining the remittance target of 1 trillion shillings (about 7.72 billion U.S. dollars) annually by 2027, coinciding with the end of the strategic plan.

The Kenyan official also said the increase in remittances not only enhances investments, but also helps strengthen Kenya’s balance of payments and reduce the vulnerability of Kenyan shilling to external pressure.

He also called on foreign ministry officials to take a leadership role in developing a framework that facilitates the comfortable return of diaspora members to their home country.