How diaspora remittances can help drive Africa’s growth

The positive trend of diaspora remittances in East Africa is seen as a beacon of hope for the continent's future economic growth. Amid inflationary measures, the significant increase in remittances has positively impacted foreign reserves in countries like Kenya. In a recent interview on CNBC Africa, Stephen Curie, the chairman of the Kenya Australia Chamber of Commerce, shed light on the current scenario and the potential outlook for diaspora remittances. During the interview, Curie emphasized the positive implications of the weaker shillings, which make it possible for more income to flow into the country. As per Curie, Kenya has witnessed a substantial growth in remittances in 2022, with a staggering $4.19 billion coming into the country. This influx of remittances is expected to continue in the short term, painting a promising picture for the Kenyan economy. However, looking at the global African perspective, concerns arise regarding the potential risk of declining real income for migrants in 2024. Factors such as global inflation and low growth prospects have raised questions about the sustainability of high gains witnessed in previous years. Curie highlighted the need for a strategic approach to immigration policies, moving away from a 'one-size-fits-all' mentality and focusing on specialized skills. He pointed out examples from countries like the Philippines and India, where targeted policies have yielded positive results in maximizing the potential of diaspora contributions. The conversation also delved into the challenges posed by inconsistencies in transfer costs and policies. Curie suggested the adoption of standardized processes, similar to initiatives undertaken by countries like Ethiopia, to streamline international remittances and ensure a smoother regulatory framework. Moreover, he proposed the implementation of tax breaks to incentivize diaspora members to remit funds and engage in business ventures in their home countries. Innovation emerged as a key theme in navigating the future landscape of diaspora remittances. Curie stressed the importance of policy changes driven by an African perspective, focusing on digital platforms and partnerships to enhance the efficiency and impact of remittance flows. By fostering a conducive environment for diaspora engagement and leveraging new technologies, African nations can harness the full potential of remittances to drive economic growth and development across the continent.