Kenya’s diaspora community is a significant economic force. Last year alone, they sent $4.94 billion (Sh640.75 billion) back home, an increase of 18 per cent compared to 2023. This by far surpasses foreign direct investment and donor funding. This money is mostly for basic needs like food and other living expenses. Despite this, aggressive efforts to attract diaspora funds are ongoing, with the government planning to raise $500 million (Sh64.75 billion) through a planned diaspora bond by 2026. However, no concrete safeguards are in place to protect investors. The Diaspora Policy is still in the pipeline, as recently acknowledged by Prime Cabinet Secretary Musalia Mudavadi. Many other safeguards, like the Diaspora Investment Policy, are also yet to be formulated.
Systemic inefficiencies
Kenya ranks 134th globally in the ease of registering property, according to the World Bank report. This highlights the bureaucratic inefficiencies and corruption that expose investors to risk. Lack of strong legal protections, financial transparency, and effective oversight mechanisms further exacerbate the problem.
- These inefficiencies lead to disputes and loss of trust.
- The lack of clear and robust regulations exacerbates the problem.
- Investor confidence is low due to the lack of concrete safeguards.
Protecting investments
To address the systemic inefficiencies, the government can mandate digital verification and registration of all real estate transactions involving diaspora investors. A blockchain-based property registry can integrate land verification services through e-Citizen, CBK, and the Kenya Investment Authority.
- Investors can remotely verify ownership and conduct due diligence through this online portal.
- Developers and sellers must undergo verification before engaging in transactions.
- Investors who fall victim to fraud can receive partial or full compensation through a government-backed insurance scheme.
Strengthening legal reforms
The government can further reinforce this by establishing a Diaspora Investment Protection Authority to regulate, certify, and monitor real estate transactions. This authority would ensure that the online portal provides access to verified properties, sellers, and real estate developers, creating transparency and security in transactions.
“A special Diaspora Land Tribunal should be created to resolve disputes swiftly, ensuring that investors do not get entangled in Kenya’s notoriously slow judicial processes.”
Additional measures
To sweeten the deal, the government can introduce tax incentives and special investment zones to attract more diaspora investors. Offering stamp duty exemptions, tax breaks on rental income, and discounted land rates for long-term investors would encourage more Kenyans abroad to participate in property ownership and development. In addition, fast-tracking construction permits for diaspora-funded projects would make real estate investment more efficient and attractive.
| Measure | Description |
|---|---|
| Tax incentives | Stamp duty exemptions, tax breaks on rental income, and discounted land rates for long-term investors. |
| Special investment zones | Fast-tracking construction permits for diaspora-funded projects. |
| Diaspora Investment Protection Authority | Regulate, certify, and monitor real estate transactions. |
The government’s ongoing efforts, such as digitising land registries, enhancing regulatory oversight, and introducing diaspora bonds, signal a commitment to progress. However, reforms alone are not enough. Without robust governance, strict enforcement, and investor protections, their impact will remain limited. Kenyans living abroad must be protected from scams and fraudulent activities. The government must ensure that any investment is secure and transparent.
Finding the solution
By providing a secure framework for property investment, the government can unlock the full potential of diaspora investment. The proposed measures, including digital verification and registration, a Diaspora Investment Protection Authority, and tax incentives, are concrete steps towards protecting investments and boosting investor confidence. It is time for the government to take concrete actions to address the systemic inefficiencies and provide a secure environment for diaspora investors to participate in the Kenyan economy.
