Diaspora remittance has recorded a 39 percent growth for the 12months to December 2018 at 274.2 billion shillings up from 197.9 billion shillings recorded during the same period in 2017.
Tax experts have attributed to the improved performance to increased value of investment in Kenya as well as an inherent sense of obligation for persons residing abroad to support their families back home.
Diaspora remittances have become an integral and regular source of foreign exchange and have continued to cushion the Kenyan shilling against other major currencies.
According to Tax expert Nikil Hira “The continued rise in foreign inflows can be attributed to among others increased value in investments for instance bank deposits attract at least 70% interest of the CBR.
Further Kenyans living abroad feel obligated to send money back home to support their extended families’’.
According to Central bank of Kenya weekly statistical report, North America accounted for 45 percent of total cash sent home.
Europe came in second at 32 percent while the rest of the world accounted for 23 percent of total remittances.
On the other hand, divergent views have emerged attributing the spike in dollar inflow to the tax amnesty announced on stashed cash abroad.
On his part, Nikihil Hira a director Tax services at Bowmans Coulson Harney says extension of the tax amnesty was to encourage uptake that was low during its first attempt in 2016”.
The amnesty was further extended to 30th June 2019, despite concerns that it would lead to inflows of illicit cash including proceeds from corruption.
Experts have however cautioned on over reliance on remittances which might shift the country’s attention from enhancing a stronger export base.
Going forward Diaspora inflows is expected to remain steady mainly supported by among others technological advances and partnerships between international money remittance providers and local commercial banks.