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Kenyans working abroad sent home Sh11 billion ($123.2 million) last month even as the government said nearly half of the amount remitted is not captured in the official figures.
The Treasury estimates that Kenyans in the diaspora sent Sh108 billion ($1.2 billion) through unofficial channels last year equal to the sum sent officially underscoring challenges associated with sending money into the country.
The diaspora community at a conference urged the government to set up a fund to shield them from foreign currency losses incurred when sending money to increase the inflows which have been growing in recent years.
“We are estimating the total remittances were $2 billion with $1.2 billion having been through unofficial channels,” said Henry Rotich, 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 financing 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 through official channels 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 per cent 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.
– Business Daily