KENYAN DIASPORA REMITTANCES ARE KENYA'S TOP FOREIGN EXCHANGE EARNER! TOURISM IS SECOND!

By MUNA WAHOME

Posted Tuesday, July 12 2011 at 00:00

The Central Bank of Kenya is for the first time targeting the diaspora with a Sh36 billion infrastructure bond with the twin aims of boosting currency reserves and plugging State budget deficit.

With what is expected to be double-digit returns, the product is likely to force banks to raise yields on hard currency accounts of Kenyans living abroad and attract larger inflows.

World Bank recently noted that countries, including Kenya, had overlooked the role remittances could play in dealing with financial shocks, eradicating poverty and improving access to finance. Countries like Ethiopia and Egypt have for years established formal systems for dealing with the diaspora inflows.

“World Bank estimate indicates that the diaspora holds up to $1.8 billion in chequing accounts earning zero interest and the proposed infrastructure bond will therefore provide an attractive alternative investment,” said CBK governor Njuguna Ndung’u.

But Bonds Traders Association yesterday said market leaders had held meetings with CBK but were not aware the instruments were to be issued soon. They noted the market players had requested that CBK keeps them updated early enough for effective marketing but that they welcomed the development.

“This would avoid conditions associated with a sovereign bond like in the case of Ghana where the state is fed up enough to the extent they would want out,” said Fred Mweni who is also the managing director of Tsavo Securities.

“The diaspora is holding hard currency of hundreds of millions in current accounts which are earning 0 to one per cent. A double-digit return will bring in even more hard currency.”

The government wants to raise Sh119.5 billion in 2011/12 from the domestic market, as it seeks to plug a Sh184.4 billion deficit, of which Sh36 billion or a third would come from infrastructure bond issues. The State has raised Sh88 billion through infrastructure bonds since early 2009.

In the current financial year, massive infrastructure projects including airport and road upgrades and a peri-urban railway system are in the works.

“Modalities to achieve this (diaspora participation) are being worked out but it is anticipated that the Foreign currency amounting to approximately $400 million will be retained by Central Bank and the shilling equivalent passed on to Government for implementing the infrastructure projects targeted,” said CBK.

The bank said after the pilot diaspora marketing, it would target the same Kenyans with long-term bonds including the 30-year Savings Development Bond.

In all, it hopes to raise $600 million from the bond issues by the end of this year, the CBK governor said. The bank industry regulator has been holding an average of $3.9 billion which is below the statutory four-month and has been fighting to increase this to four months. Commercial banks hold another $1.2 billion.

“The Central Bank has resumed its plan to build up international reserves over time with the view to reach coverage of four months of imports of goods and services within the programme period,” IMF said last week in its assessment of the country.

Targeting commercial bank current accounts comes weeks after the governor engaged in a bitter war with the commercial banks accusing them of arbitrage and speculation that has caused the Shilling to fall to record lows. Apart from asking banks to punish the culpable dealers, it has also opened bidding for its hard currency to all banks and forex bureaus.

The Kenya diaspora this year has averaged $66 million in monthly remittances and overall has overtaken tourism as the most important source of foreign currency, with substantial improvement expected over the $641 million total recorded last year.

“The increase in remittances in 2011 reflects economic recovery in source markets, and a favourable domestic economic environment,” says Charles Koori, the director of research at the CBK.

Apart from the diaspora, foreigners are expected to invest in the infrastructure bonds due to various incentives, boosting the flagging Shilling apart from contributing to de-bottlenecking Kenya infrastructure.

“Foreign investors usually participate because there is no withholding and capital gain taxes on the issues,” said Mr Mweni. Past issues have all been fully subscribed.

mwahome@ke.nationmedia.com

Invitation to Partner with Fellow Kenyans: Kenyan Embassy in Washington, DC

On behalf of fellow Kenyans, you are hereby cordially invited to partner with fellow Kenyans in Washington DC at Kenyan Embassy, on Tuesday July 26th, 2011 at 1:00pm.

The main objective of the meeting is to register our protest to the continued refusal by Members of Kenyan Parliament to pay their taxes like all other Kenyan do. It is with great concern that Kenyans have noted the MPs unrelenting stubbornness, arrogance and total disregard of the welfare of fellow citizens. As they continue to allocate themselves from the coffers, it is only fair that they pay all their back taxes to enable the government to provide most needed services to citizens. Other key issues such as corruption and insecurity will be addressed.

We hope that you will encourage your membership to join fellow Kenyans so that together we can speak truth to power in one voice!
Please feel free to contact me for more information and let me know if you would like an opportunity to address fellow Kenyans during this event.

Best Regards,

Dan Mbuthia
Director, Congress of Africa
Email:dmbuthia@rocketmail.com

Kent County/Grand Rapids Grassroots Planning Session and Training (Grassroots Planning Session)

Kent County/Grand Rapids Grassroots Planning Session and Training (Grassroots Planning Session)

Grassroots Planning Sessions are starting now—and we need you to join us for these critical strategy meetings. Your input will shape our roadmap to victory, since it’s going to take meetings all over our state to spread the word about this campaign and our movement. Now is the time to get involved to take real action for President Obama and democrats up and down the ticket, since your ideas and feedback will determine our organizing in your community. This session (recurs the 3rd Saturday of each month) will also hone our skills in knowledge of issues, reaching voters through effective communication, holding house parties, building Neighborhood Teams, canvassing door-to-door and small businesses, and registering voters. You will be energized and pleased that a small investment of your time can mean so much to our community !

Times:
Date:
Start: Saturday, June 18, 2011 1:00 PM - 3:00 PM
End:Saturday, July 16, 2011
Host:
Host:
Gail Collins
Contact Phone:
Contact Phone:
616-901-9358
Location:
Location:
Kent/Ionia Labor Council Building (Grand Rapids, MI)
918 Benjamin NE
Grand Rapids, MI 49503

From Fuller NE (north of I-96 and south of Leonard NE) turn east on Mason NE by Burgett Floral. Go 1 block to the corner of Mason & Benjamin.

East Grand Rapids for Obama, Grand Rapids Community College for Barack!, West Michigan is In!


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Saturday, July 16, 2011

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