The Investment Trends of Kenyans in Diaspora

Over the past few years, Kenya's economy has experienced a remarkable surge in remittances with the total amount reaching a staggering $378.1 million in 2023.

The increase has brought about a significant change in the perspective of Kenyan individuals residing outside the country, particularly in Europe. One noteworthy outcome of this shift is the rise of reliable investment allies, including commercial banks, instilling a sense of trust and encouraging the diaspora to invest in their country of origin.

Joy Wanjiru, the founder of the African Women in Europe Welfare Association, points out that Kenyans living abroad have traditionally been hesitant to invest in their home country due to worries about the safety of their funds. However, there is now a promising shift happening as diaspora communities unite to establish Saccos. One notable example is the African Women in Europe SACCO, which has joined forces with Cooperative Bank as its financial partner. Through this approach, members can save money and support entrepreneurs in Kenya, ultimately fostering the development of local businesses.

The Cooperative Bank of Kenya, through its Diaspora Banking and Remittances Department, is actively working to understand the needs of East and Central African communities abroad. The goal is to promote access to remittances, link these financial flows to diverse solutions, and create innovative investment opportunities for migrants and recipients. Pauline Kieme, the head of the department, emphasizes the wide range of accounts offered, from individual and group accounts to Sacco accounts and children's accounts.

Tailoring solutions to the unique needs of diaspora Kenyans, Cooperative Bank provides options for interest-earning savings, investments in Nairobi Stock Exchange shares, and participation in treasury bills and bonds. Additionally, the bank collaborates with over 14 money transfer organizations, offering diverse channels for sending money back home, including direct transfers to mobile phones or bank accounts in Kenya.

As diaspora communities look for effective ways to channel their money back home, the concept of "Chamas," commonly associated with group savings in Kenya, is gaining traction abroad. Members contribute over a set period, enabling collective investments such as land acquisition. Cooperative Bank, recognizing this trend, has established a property hub to verify properties, offering diaspora Kenyans access to finance for property acquisition.

The bank's digital services have proven crucial for diaspora members, allowing online transactions, bill payments, and even renewing driving licenses. In a notable shift, the Middle East, particularly Saudi Arabia, has become a significant source of remittances to Kenya, challenging the traditional dominance of the US and Europe. Cooperative Bank has strategically partnered with specific companies in the Middle East, ensuring convenient means for Kenyans living there to send money back home.

According to Kieme, the bank offers insurance products covering properties, health, and even last respect coverage. This comprehensive approach aims not only to help diaspora Kenyans grow their wealth but also to safeguard and protect it. The growing trend of diaspora investments signifies a transformative era, where Kenyans abroad are actively participating in the economic development of their homeland.

The collaboration between financial institutions and diaspora communities has the potential to greatly impact Kenya's economic landscape.