Kenya Sees Need for Regulatory Support to Cut Remittance CostCharles Wachira
Central Bank of Kenya Governor Njuguna Ndung’u said regulatory support is necessary for business collaborations that will cut the cost of transferring remittances, a key driver of the East African nation’s economy.
Kenyan workers abroad sent home a record $1.3 billion last year, the same amount generated from the country’s top export of tea, and up from $338 million almost a decade earlier. The average cost of remitting $200 from the U.S. to Kenya is $12, according to data compiled by the World Bank.
“The challenge for us as regulators is to ensure that remitters can send funds to their recipients conveniently, safely and at a reasonable cost,” Ndung’u said today in the capital, Nairobi. The bank is trying to boost competition and lower transaction costs by approving partnerships between local financial institutions and money-transfer operators, he said.
Ndung’u spoke at an event to announce a service that will enable subscribers of Safaricom Ltd., Kenya’s biggest mobile-network operator, to receive money from MoneyGram International Inc.’s network of 345,000 locations worldwide.
Remittance inflows support household spending, spur investment and serve as a key source of foreign exchange, said Ndung’u. It’s important for regulators to encourage remittances being sent through formal challenges, rather than a“wallet or hand luggage,” so the funds can be tracked, he said.
Kenya is sub-Saharan Africa’s third-biggest recipient of remittances, after Nigeria and Senegal, with more than 3 million people of Kenyan origin living abroad. North America is the main source of remittances to Kenya, accounting for about half, followed by Europe at almost a third.