- LIVE TV
Kenya is set to cut charges on money sent home by citizens living abroad from September in yet another measure aimed at boosting remittances that have become an important source of hard currencies.
Treasury secretary Henry Rotich said the new rates are contained in a policy document on remittances that the Central Bank of Kenya has crafted in partnership with the African Institute for Remittances.
“We have analysed the cost of transferring money from the diaspora to Kenya to identify areas in which we can lower charges such as taxation and transfer fees,” Mr Rotich told the Business Daily Monday.
Kenyans abroad have often cited the high cost of sending money back home through official channels as an impediment, prompting a strategy rethink by the government.
Mr Rotich said the downward review is expected to further drive down the cost of money transfer.
The cost of sending cash in the country is estimated at 9.2 per cent of the value of the transfer, which is higher than the global average of 8.96 per cent.
The volume of cash flows from Kenyans abroad has been growing over the years, hitting Sh140.9 billion last year.
Apart from supporting household consumption and real estate growth, diaspora remittances have stabilised the shilling amid dwindling fortunes of traditional foreign exchange earners like tea, coffee, horticulture and tourism.
Mr Rotich’s policy announcement comes hot on the heels of a diaspora conference early this month in Nairobi where President Uhuru Kenyatta promised to institute mechanisms of cutting costs on diaspora remittance.
The government also hopes that the increased competition among commercial banks jostling for a pie of the remittances business will result in lower sending fees.
Foreign Affairs secretary Amina Mohamed on Sunday asked Kenyans in the US to widen their investment back home, saying the government would start offering preferential duty waivers on their businesses.
“We are exploring possibilities of preferential duty waivers and other concessions for diaspora businesses,” said Ms Mohamed in a statement from the US.
The fiscal incentive plan comes even as use of mobile money transfer for international cash transfers is gaining prominence in the country since it is flexible and cheaper.
According to GSMA – the global association of telecoms operators – the average cost of sending Sh9,336 ($100) via mobile money is Sh375 ($4) less than half the average cost of sending money globally through traditional money transfer channels.
Safaricom has partnered with traditional service providers, Western Union and MoneyGram to move money into Kenya via M-Pesa.
– Business Daily