Kenya charms diaspora to capital markets

Monday May 01 2023
Nairobi Securities Exchange.

The trading floor at the Nairobi Securities Exchange. PHOTO | NMG


Kenya will convert at least 50 percent of its diaspora remittances receipts into investments in the domestic capital markets as it seeks to address harsh economic conditions and a relentlessly depreciating shilling which have scared away foreign investors.

Senior government officials last weekend engaged Kenyans living outside the country in an interactive virtual information session where they charmed them to take up the slots held by foreign investors in the country’s capital markets.

The EastAfrican has learnt that the Kenyan government has been holding a series of similar webinars, attended by a host of state officials including from the State Department of Investment Promotion, to enlighten the diaspora on how to invest back home.

During the session held last Sunday, the officials – including CEOs Wycliffe Shamiah of the Capital Markets Authority (CMA) and Geoffrey Odundo of the Nairobi Securities Exchange (NSE) – said the state has taken measures to ensure investments from overseas are safe and protected.

Capital Markets Authority CEO Wycliffe Shamiah

Capital Markets Authority CEO Wycliffe Shamiah speaking at the Nairobi Securities Exchange. PHOTO | DIANA NGILA | NMG

Read: Better days ahead for diaspora, says Kenya foreign minister


State guarantees

Kenya’s Deputy President Rigathi Gachagua while on a working visit to Botswana last Sunday, also delivered a similar message to the Kenyans living there, urging them to invest back home.

“We want to create an investment forum guaranteed by the government for the people in the diaspora. This will ensure you can invest back home and your savings are safe,” Gachagua said.

“The money from the diaspora is so huge; we can have an enormous reserve from which we can borrow,” he added.

Kenya’s State Department of Investment Promotion Principal Secretary Abubakar Hassan said that while the country’s diaspora remittance receipts have been growing, most go to consumption, with negligible amounts being invested in the capital markets.

“The State Department of Investment Promotion has been tasked to mobilise and convert at least 50 percent of the diaspora remittances into investment flows,” he said.

Diaspora remittances hit record high

Diaspora remittances into the country last year hit a record high of $4 billion, making it Kenya’s largest foreign exchange earner currently.
If all goes according to plan, at least $2 billion from remittances will be converted into investments, covering the entire amount held by foreign investors in the corporate bond and equity markets, significantly reducing the markets’ foreign exposure risk.

Read: Kenya’s diaspora remittances rise to $4.027bn

Last year, the depreciation of the Kenyan shilling to the dollar, political unrest and economic uncertainty saw foreign investors – who accounted for about 59.5 percent of total turnover – pull out a record $176 million from NSE in the twelve months to December 2022.

Kenya Diaspora Alliance chair Shem Ochuodho told The EastAfrican that Kenyans in the diaspora have not been investing back home mainly because they are unaware of investment opportunities, and some have been discouraged by fraudulent brokers.

ochuodho s

Chairman of Kenya Diaspora Alliance Dr Shem Ochuodho. PHOTO | FILE | NMG

“Many have been conned and disappointed in their attempts to invest back home. Creating awareness of the whole investment scope available to them is key for them to make shrewd decisions on where to invest and why,” Ochuodho told The EastAfrican.

“It would be great to have say 60 percent of our stocks owned by Kenyans, and largely by diasporans,” he added.