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Electronics, medicines top shipment from kin abroad

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Electronics, medicines top shipment from kin abroad


Cargo Containers at the Second Container Terminal within the Port of Mombasa in this photo taken on 11th January 2022. PHOTO | KEVIN ODIT | NMG

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Summary

  • A Central Bank of Kenya (CBK) survey on diaspora remittances shows that electronics (including computers), clothing and medicines account for 24.4 percent, 17.8 percent and 13.6 percent respectively of the value of goods received from relatives abroad.
  • This is significantly higher than the value of household goods, vehicles and other items, whose share of costs of the merchandise shipped to Kenya is in the single digits.
  • Kenyans are also directly sourcing hard-to-find or expensive medication from cheaper suppliers abroad, especially the kind used to treat chronic illnesses.

Electronics, clothing items and medicines account for more than half of the value of items Kenyans living abroad ship to their relatives back home, highlighting the demand for higher quality at a more affordable cost.

A Central Bank of Kenya (CBK) survey on diaspora remittances shows that electronics (including computers), clothing and medicines account for 24.4 percent, 17.8 percent and 13.6 percent respectively of the value of goods received from relatives abroad.

This is significantly higher than the value of household goods, vehicles and other items, whose share of costs of the merchandise shipped to Kenya is in the single digits.

Imported quality goods on Kenyan shop shelves often sell at a significant premium, especially in the case of medicines, forcing those in need to seek direct imports through their contacts abroad.

The average spend on imported clothes and shoes is about Sh340,500 ($3,000) while the spend on medicines is higher at an average of Sh681,000 ($6,000), said the CBK survey without giving details.

Kenyans are also directly sourcing hard-to-find or expensive medication from cheaper suppliers abroad, especially the kind used to treat chronic illnesses.

“In-kind goods are sent to Kenya by means of the respondent travelling with the goods while on trips to Kenya as cited by 28 percent of the respondents,” the CBK said.

“Other channels include items carried by relatives or friends of the respondent, by courier companies, transport operators and the postal network, which all play an important role in facilitating in-kind remittances to Kenya.”

The respondents said they preferred these channels mainly because of convenience (20 percent), appropriateness, safety and security of the items, favourable cost, familiarity and ease of access.

The bulk of the items carried home cost between $501 (Sh56,800) and $5,000 (Sh567,500), with the relative cost of remitting falling as the value of the item goes up.

“The survey revealed that the cost of sending items worth between $1001 (Sh113,600) and $5,000 (Sh567,000) would cost up to 10 percent. On the other hand, a majority of respondents indicated that it would cost them up to $20 (Sh2,270) equivalent to 20 percent to send items worth less than $100 (Sh11,300),” said the CBK.

On average, the cost of in-kind remittances stands at between 15 percent and 27 percent, depending on the channel one opts to use to carry the item.

Therefore, it costs a lot more to remit goods compared to a direct cash remittance, whose average cost was found to be between four and five percent of the amount remitted while using the most dominant and preferred service providers such as mobile money operators, money transfer companies and banks.

Remittance inflows to Kenya stood at an all-time high of $3.72 billion (Sh422.2 billion) in 2021.

Shifting to digital channels has helped lower the cost of sending money home, in turn pushing up volumes which have grown ten-fold in the last 15 years.

Safaricom’s M-Pesa is now the most popular platform for sending money home, cited by 20 percent of the survey respondents as their preferred channel.

Banks are the second-most popular channel, having also invested in digital platforms to aid their clients send and receive money faster from abroad.

This means that a majority of recipients (72 percent) are now able to get their funds in real-time, as opposed to the waiting periods of up to three days before the introduction of digital remittance channels.

The cost of remittance and hidden charges, however, remain a lingering concern for the diaspora despite the strides made in bringing them down with the adoption of digital channels.

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