Charting a Course for Diaspora Investment in Kenya

cover image of the report, 'Charting a Course for Diaspora Investment in Kenya'

This report presents policy recommendations for how Kenya can further enhance investment in the country by its growing and diverse diaspora. Presenting a thorough review of the Kenyan and global evidence, and informed by extensive stakeholder consultations, it proposes policy recommendations for addressing the challenges to greater investment by – and raising awareness and engagement among – the Kenyan diaspora that could deliver substantial contributions to national development. 

Download full report (PDF)

A combination of political and socio-economic reforms has contributed to sustained economic growth in Kenya. This includes adopting a new constitution in 2010 that introduced a devolved government system and a bicameral legislative house. Several strides have also been made in terms of financial inclusion, largely due to the introduction of M-PESA, which is an innovative mobile money system that has ensured greater financial access and inclusion. 

As emigration has increased to other parts of the world, remittances have been steadily increasing over the years, with remittances rising to 4 billion US dollars in 2022, accounting for around 3–4 per cent of the country’s gross domestic product (GDP) (Central Bank of Kenya 2023). With rising trends in remittances and increasing diaspora investment, the Government of Kenya (GoK) has incorporated the important role that the diaspora can potentially play in the country’s development in national policies and strategies. Additionally, surveys conducted by the Central Bank of Kenya and the Commonwealth indicate the potential diaspora members can have for increasing investment and their willingness to scale up investments in the countries of origin and support development.

While diaspora investments have been growing in recent years, surveys show some challenges that prevent the diaspora from increasing investments, including aspects of trust in investment partners and a lack of adequate information on and awareness of investment options and partners. This report, therefore, aims at amalgamating a combination of findings from reviews of literature and policies implemented in Kenya and globally, as well as stakeholder consultations. Based on evidence-based research, it proposes some policy recommendations on how Kenya can further enhance its diaspora investment and contribute towards national development. 

The trends in Kenyan emigration indicate that a large portion of the diaspora (over 75 per cent) is located in developed countries like the United States of America, the United Kingdom and Canada, with many of these migrants being skilled workers. For instance, over 50 per cent of the Kenyan diaspora reported having a high school or college education (MPI 2014a). With large-scale emigration to countries like the USA, a large proportion of remittances to Kenya tend to originate from the United States of America to remit funds to support family and friends back home. More recently, there has been a sharp increase in emigration to Gulf states such as Qatar and the United Arab Emirates, with most emigrants to these countries being unskilled workers.

The Government of Kenya has made strides in incorporating diaspora issues into its national policies and plans. This included the development of the National Diaspora Policy (2014) and the inclusion of diaspora issues in the Kenya National Payment System Vision and Strategy (2021–2025). Furthermore, engagement with the diaspora has advanced over the years and has been incorporated within the Medium-Term Plans to the 2030 Kenya Vision. The potential contributions of the diaspora towards national development have been recognised and plans to address the key challenges they face have been put in place to enhance their involvement and improve dialogue channels with them.

To further bolster diaspora investment, there is a need to establish an overarching national diaspora investment vision outlining priority areas for investment aligned with the national development agenda, as stipulated in the Big 4 Agenda. To operationalise this, there is a need for an evaluative and evolving diaspora investment strategy in the medium term that stipulates specific actions. The actions that could be taken within the short, medium-to-long term include fostering regular engagement with the diaspora and enhancing co-ordination of diaspora investment initiatives across government and key stakeholders. Additionally, the government could also take steps towards reducing costs of remittances, increasing access to information on various investment options, enhancing diaspora trust, identifying business partners for the diaspora, and sustaining a conducive ‘ease of doing business’ environment to facilitate diaspora investment.