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Harnessing the Diaspora's energy for Kenya PDF Print E-mail
Written by Peter Ndiangui   
Thursday, 12 April 2007

Lately Kenyan politicians, businesses and other organizations have been paying far greater attention to Diaspora Kenyans than is justified by their numbers or even their present influence.

However limited this input now is, Kenyans who have traveled beyond our borders have played a vital role in our social, political and economic advancement. Examples of such persons extend from the first president Jomo Kenyatta to freedom fighters like Bildad Kaggia, and Waruhiu Itote (General China) who attended military studies in Ceylon and later fought the Japanese in what is now Myanmar. After the World War II soldiers, the next mass exodus was the student airlifts of the 1960s that saw numerous Kenyans travel to the USA or the Eastern bloc countries for their university education. Tom Mboya organized the American version famed as 'the Kennedy student-airlifts' while Jaramogi Oginga Odinga facilitated the scholarships to the Eastern bloc and the USSR. Among prominent émigrés from this period include Prof. George Saitoti, Nicholas Biwott and J.J Kamotho.

ukusaimmig.jpg Few if any Kenyans left the country for long periods abroad. Most of the student emigrants soon returned to spearhead economic progress,holding senior positions in government and the private sector immediately after independence. In the period immediately after independence, education was praised by the first president as the sole path to wealth and development, a belief that persists unchallenged to this day. This passion for education grew and grew to such an extent that it has long become an obsession, education being sought for no practical end. The upside of this centrality of education in the national psyche however was a surge in school intakes and a striving for higher education. Great plans were worked out for the future of the young and confident country, including the publication of progressive policy papers. A healthy inquisitiveness also spawned successful and respected academics like Wangaari Maathai , Dr. Florence Wambugu , the late Prof. Odhiambo (founder of ICIPE) and the others. The stream of Kenyans migrating, even temporarily has grown steadily ever since, with a clear diversification in work and study destinations.

In the late 1980s as the effect of the ESAPs begun to bite educated Kenyans begun to experience increasing un-employment. Many of these had continued their studies up to Form Six while many others had entered university. This, remember, was the period of the double-entry where the 8.4.4 system came into being at the university level. So the universities were putting out more students every year while a stuttering economy could not absorb them into the labour-force. Tourism took a beating, while manufacturing and other key sectors nosedived. At the same time corruption, tribalism and nepotism took centre stage.

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Still the thirst for upward social and economic mobility, believed possible only via higher education, ensured that education retained its hallowed place in the national consciousness. With fewer places to go around, cut-off points for university entrance were raised and the many students who desired further education, but could not be accommodated in the national system created demand for further education abroad. At the same time, political and economic tension increased nationwide. Many Kenyan academics allied with reform movements fled the country. The numbers of students who were pushed abroad by the lack of university places was now increased as the ones who failed to get local places were joined by others who desired the greener pastures of overseas universities, even though they had been accepted in local ones. This was caused in part by the perception that 8.4.4 education was of an inferior quality to the previous model and the fact that for the first time in the country's history, university graduates were finding themselves jobless. As a result many more decided to pursue even higher post-graduate education. The popular Harambee Movement was harnessed to raise funds to send these students abroad.

This mass-movement was boosted by the 'experience/knowledge effect' of those who had returned from the 1960s air-lifts who were now themselves parents or were acting as advisors to their relatives and friends sending their children abroad. The movement was especially strong in the more prosperous regions of the country, snowballing as more and more positive reports were returned home. Then in the mid 1990s with the technology boom in the USA, the number of foreign students that could be taken up by the local economy increased, this dovetailed with the increasing perceptions of the home country as being economically unviable and politically unstable. Thus, Kenyan students more than ever before were making a one way trip out of the country replacing the circular migration that had been the norm when all they had sought abroad was higher education and advanced training.

A report by the Institute for International Education and the US State Department shows that among African countries sending students to the US in the 2001-2002 school year, Kenya led with 7,097 students, followed by Nigeria (3,820), Ghana (2,672), Egypt (2,409), and South Africa (2,232) As much as corruption, lack of work and other factors cited above caused phenomenal emigration, policies in the United States crafted to encourage diversity in immigrants entering United States also fuelled this exodus. In addition to the students were many highly trained professionals including doctors, lawyers and economists. Increasing numbers are finding homes and jobs in Botswana,South-Africa, Australia and Western Europe. For instance, the number of Kenyan citizens in Germany was only 576 in 1980, but had doubled to 1,222 by 1990 and ballooned to more than 5,200 by the end of 2001. These professionals aside, other Kenyans are employed in low-skilled positions in the Middle East while elementary school teachers sought jobs in the Seychelles, Botswana and South Korea. The Kenyan community abroad is therefore diverse and large, and it is growing still.

How is all of this relevant? The experiences of some economies previously under-developed like ours, who have leveraged on their Diasporas in transforming their economies, indicate that we can achieve similar results. This will be possible if we understand this history and shape our policies in a fashion that encourages both knowledge transfer and capital investments by our Diaspora. Of these emigrants no statistics are so far available on those who have returned to stay but current influence on the money markets by the Diaspora remittances either to relatives or for investments like in the Nairobi Stock Exchange or Real-Estate have been evident.

Reviewing this pheneomenon a Harvard business school researcher was quoted speaking on technology transfer. He stated that "Taiwan, Singapore, Hong Kong, and similar smaller economies have achieved a full transition from agriculture-based economies to industrialized economies. In those situations, technology transfer increases labor productivity and wages directly"

One third of all Chinese students who leave the country return home in the long term. These returnees bring with them not only financial capital but also cultural capital composing of different skills, values and practices. They represent a force of change. In attempting to replicate facets of the society or success they have seen abroad they act as agents of change, bringing about new economic and social orders.

In China, beginning in 1978 Deng Xiaoping, promoted the movement of an elite Chinese cadre to the US for studies. Since then, there is at anytime over one million Chinese studying in the USA. The returnees influence on Chinese society is not clearly visible, but they have home to ministerial posts, important jobs in academia, finance and business. Whether or not they will be the country's next leaders is unclear but their influence could profoundly change china. While most returnees may not see the West as an absolute model for their country, their experiences make them see that there are alternative ways for China to develop and for us to lead our personal lives.

The harnessing of the Taiwanese Diaspora's drive and skills was a key element in the deepening of Research and Development and the commercialization of the work at the Hsinchu Science Park that propelled Taiwan into technology giant status.  Thousands of Taiwanese engineers educated in the US, up to 350 every year, returned to the islands in the early 1990s swelling a stream of returnees to a country that had in the early 1980s attracted only 10 returnees per year. More
than 2500 returnees were working in the park by the end of the 1990s. The park itself was a progression from policies initiated on the advice of overseas Taiwanese to domestic policy makers. By the 1990s 40% of the returnees had risen up the managerial ranks and were able to lend their technical skills, organizational and managerial knowledge, entrepreneurial experience and international connections, to Taiwan's successful catch-up strategy.

Taiwan's export-oriented industrial sector made the skills of returning migrants easily transferable. These businessmen became heroes of Taiwanese industry and received the popular nickname of "astronauts" because so many of them "lived in the air" commuting to and from Silicon Valley. By 1987, 20% of the executives of the larger Taiwanese firms were former migrants, a product of the reservoir of technical and managerial talent that had been honed abroad. Over the Straits on the mainland, foreign direct investment has been a major factor in the emergence of China as an economic power. It is estimated that half of the $50 billion dollars in FDI that flowed into China in 2002 originated from the Chinese Diaspora.

In 1998 Non-Resident Indians (NRI) bonds, sold to shelter India from the economic sanctions imposed by the West following its nuclear tests, were a great success cushioning the country from th effects of its financial ostracism. Guaranteed by the state bank of India and only available to non-resident Indians these 5 year bonds were a huge success. Overseas Indians (NRI) all over Europe and the USA purchased bonds worth over $ 4 Billion. The high liquidity evident and over subscription of IPOs such as the KenGen's has been an indicator that Kenyans in the Diaspora have the ability to subscribe to well-structured government bonds for infrastructure for example.

The contribution however has not been merely financial. Senior Indian engineers in large US companies were among the first to outsource software services to India, thereby helping establish its reputation and the credibility of producers in regions like Bangalore. Most recently there has been much greater interaction between the Indian government and the Indian Diaspora in determining policy to support the IT sector. Indians abroad have been critical contributors to the formulation of IT policies and the availability of venture capital in the services sector. One of the most vital roles played by the Diaspora in the Indian case as noted by a report from the Indian securities council is the provision of information critical to the development and growth of various sectors.

In China, the mainland government, appreciative of the Taiwanese experience has been aggressively recruiting engineers to return from the US while increasing investments in science and technology education and research and in the physical infrastructure for Telcos-including hundreds of high technology zone parks and incubators. The same has been true for Israel, Ireland and India.

An interesting point is the difference between Chinese and Indian remittances. While Chinese have been high on FDI -large-scale business targeted remittances (over $ 24 billion in 2002 coming from Chinese in Diaspora), India has received relatively low FDI remittances amounting to only $ 4 Billion in 2002. Small family-oriented remittances have been significantly lower for the Chinese, a mere 7 billion between 1991 and 1998, one seventh of the Indian family-oriented remittances. Where India's overseas professional class remit finances primarily to their families, Chinese in the Diaspora tend to be higher net-worth individuals who have made it overseas as entrepreneurs and who now remit FDI with high profit motives, i.e. for investment in business opportunities in China. This knowledge is key in the formulation of policies that can aid massive FDI inflows and create systems that guide such investment from the Diaspora. Overall various countries have seen their economies transformations spurred by synergies with their overseas populations.

Although remittances are a godsend for cash-strapped countries, they only go so far in aiding economic growth. Remittances from the Kenyans in the West for example played a significant role in sustaining the foreign exchange-strapped Kenyan economy in the 1990s when the Moi government suffered a ban from the donor community. By 2006 an estimated 1 Million Kenyans living abroad sent Kshs. 70 billion up from 32 billion sent the year before. While this year Kshs.75 billion is expected. The housing ministry posits that 50% of thiswill be invested in real estate, 6.7% of the total investment in property, while the rest finds its home in the stock markets or in consumption by relatives of the remitters. The growth of remittances has significantly affected the valuation of the shilling in the recent past. A failure by the government to put in place monetary policy that recognizes the effect of these remittances on money supply can have deleterious consequences on the local economy.

The knowledge gained by a stint outside the country has been of inestimable value in translating existing knowledge into products to meet human needs in the home country and for global markets and in creating brand new business models. The commercialization of the R&D locked into some of the forward thinking research institutes like KARI, KEMRI, KIRDI and the universities at large can for example be brought into effect by liaising with Diaspora Kenyans who have experience in similar industries abroad.  The revolutions in economic progress in China , India, South Korea, Taiwan and Ireland are proof that the despair of brain drain can be turned into brain exchange and brain gain. The experience and expertise create a brain trust movement into which Kenyan society, government, and industry can tap for the fuel of speedy progress.

Industry specific influences can be achieved for example in tourism, Biotechnology, Energy and Information Technology.

It is important to recognize emerging institutions that might bring the Diaspora together for acting on these and other ideas; examples include The Kenya-Club and Kenya Development Network Consortium . With such events as these in Kennesaw State University's academic year-long study, the "Year of Kenya ' we may be living the start of sensitizing the Diaspora of a movement 'beyond remittances' that can grow powerful if acted upon in concert with pro-active government policies that recognize this Diaspora potential.

To enhance the Diaspora participation and move beyond mere remittances policies are needed that are geared towards;

  • Promoting remittances that are profit driven, for example raising capital to start up outsourcing centers or to venture into key production processes like Bio-fuels. Formation of such consortiums can be complex and would need concerted cooperation with the governments of host countries in harmonizing investment regulations to protect the investors. The Chinese for example have eschewed transmitting funds driven by the sentimentalism of belonging but have been pretty aggressive in business to business remittances.

  • Multi-pronged strategies from portfolio investments, to technology transfers and improved trade Links.

  • Promote the involvement of local governments in pulling the Diaspora involvement. The Nakuru Business Council for example would market itself and seek to improve the city in order to promote it as a destination for these investments. Incentives would be granted by local citizens and joint-ventures established with local businesses.

signature.jpg Just as South Korea scaled the technological ladder by importing capital equipment of recent vintage which embodied frontier technologies, Diaspora networks embody technologies in human (rather than physical) capital. While immigration policy has become an explicit industrial policy of the global north, so too must policies aimed at utilizing the Diaspora advantages become explicit elements of industrial policy in the south, Kenya included.

Peter Ndiangui
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written by Tim Norwood , April 12, 2007
I have finally finished reading your article. For some odd reason you have forgotten the migration of two very large Kenyan communities, actually the biggest groups of Kenyan emigrants to Western Europe and the UK in particular. The first of these is Kenyan Asians, the second is Kenyan Somalis. I am afraid I don't know that these groups are particularly religious at sending money to Kenya but the Kenyan Asians are particularly successful here, actually with Ugandan Asians they represent the most successful immigrant group.
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Kikuyus, Kalenjins too.
written by That Kenyan Loser , April 12, 2007
For some odd reason you have forgotten the migration of two very large Kenyan communities, actually the biggest groups of Kenyan emigrants to Western Europe and the UK in particular. The first of these is Kenyan Asians, the second is Kenyan Somalis.

Kenyan Kikuyus, Luos, Kisiis, Nandis, Kambas e.t.c. are also very successful where I live. Let's get their numbers in the study too. :=)

I would assume that all Kenyans -- regardless of ethinic origin -- would be included in the data. Why do you assume that Kenyan Asians and Somalis have been left out?
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written by That Kenyan Loser , April 12, 2007
Great piece, though a bit long. I see that you are in Australia. What are the numbers there?
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written by Stephen Wanyama , April 13, 2007
I would like to be corrected but I do not believe that remittances targeted merely at the stock market and consumption by family members are particularly helpful to the nation's growth.

What changed China and India more than money was an entrepreneurial spirit. Too much in the way of remittances from abroad while freeing up resources that would have otherwise be used on consumption, may also cause relaxed, laid back attitudes that preclude risk-taking and business start-ups. Even where these are started, the experience is usually that the remitting migrant is expected to continuously bankroll the enterprise. That is to say, the hunger and efficiency of a normal start-up are diminished.

That is what we need more than anything else. Money is so cheap and plentiful in Kenya today, but too many people are after get rich quick schemes, too few people are involved in real wealth creation activities.
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written by Amir Ibrahim , April 13, 2007
Wanyama.
Whereas what you say is correct, it is also true that these lazy types who are waiting on handouts from their migrant relative abroad are by their consumption boosting the businesses of those savvy enough to start and maintain enterprises. Further, a large part of remittances goes into paying for school fees, farm inputs or into offsetting the liquidity shortfalls in the planting season or when the bread earner is down with an illness.

Anon at 0054, Wanyama
This seems to me to be exactly the point and especially with regard to returnees. Unless a returnee is able to start a business and employ people in Kenya, or invent a process or concept that would be of economic value to the country, then he serves the general interest better abroad, even if there illegally.

P.S, Why is it that black people do not generally have an entrepreneurial attitude? Too many of us are working hard seeking to become Professors or Senior staff at the United Nations. Indians, Chinese and Koreans are more interested in owning shops and factories.
Watch this video and weep for these people
.
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written by Tim Norwood , April 13, 2007
The Kenyan Asians and Somalis are different primarily because their migration was forced on them, unlike others who made more or less voluntary decisions to migrate.

On the remittances issue, remittances will only fuel real long term growth if they are used more for investment than for consumption. In an economy like ours with so many businesses in turn remitting their profits outside the country, and a large part of the economy being based on imports is it a wonder that in spite of all these inflows, unemployment and poverty are still as high as they are today? This in spite of the massive numbers you show above?
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written by Honey , April 14, 2007
Well said Emmo.
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written by emmo opoti , April 14, 2007
That economic growth can be fuelled by remittances is a fact, but this growth is only sustainable or even possible if reinforced by an attendant creation of wealth through business. That so many see the growth in the number of buildings in the country, shiny new ones, or the extended Bull Run on the NSE as symbolic of national economic growth is sad. If this were true then there would be a decrease in unemployment, a reduction in crime and a growth in production, none of which is evident. It is not all gloomy however; there are increasingly large numbers of Kenyans starting businesses, especially young Kenyans.

It is supply growth and not an increase in consumption that is a true indicator of economic progress. Nationwide, overly high consumption chasing after low output drives up the prices of the output without leading to a concomitant increase in living standards. This is what is happening in Kenya, higher prices for the very same old goods as the economy adjusts to the increased money supply. For sure there are jobs created in the new shopping centres and the remittances no doubt raise the living standards of those families that receive large amounts of money, but this is only in the short term, when everything starts costing more, the value of those jobs to economy falls in relative terms. So incomes do go up for these receivers of remittances, but the cost of living also shoots up, so that the receiver is altogether worse off. In other words, there is little value creation and considering that population increase and the dependency ratios are only growing real net value per capita is actually diminishing especially among those excluded from the growth in the service sectors or those with a kindly sister in the USA sending mabunda ya noti to Kwale.

And the vicious circle is self-perpetuating as the fall in living standards ensures that little if any of the sums Western Union and Moneygram faithfully render to the mwananchi is used to create wealth. So more is needed from abroad, and those without an angel abroad look for whatever resources they can manage to send an able-bodied man over.

In fact remittances have an effect not altogether different than the money haemorrhage we enjoyed in the early 1990s, true it is not as severe but at root it is the same phenomenon. A large increase in our output is what we need, new businesses, more exports ( I am one of those who refuse to see the strong shilling as a good thing). If we are happy with the multiplier effect caused by a few households spending what they have received from abroad, how much more will we celebrate the multiplier effect of Kenyan businesses increasing employment and domestic output?
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Beyond Remittances
written by pndiangui , April 16, 2007
In summary , the case of diaspora contribution to their countries might take the form of;
a. Remittances
b. Knowledge transfer
c. Technology Transfer
d. Cultural & life-style transfer

There are two 'types' of remitances or I see remitances most likely serving mainly two motives;
1.Consumption
2.Investments

As we all know, the specific investments portifolios that the diaspora might be looking at when sending the remittances for investnments purposes would largely be for;
1.Term deposits
2.Public stock market (Nairobi stock exchange)
3.Real-estate investments (Mostly residentials or
might include other forms of real-estate that are oftenly neglected

5.Government or Corporate bonds
4. Private Equity (Small to medium businesses of which some might be family owned)

In knowledge transfer , these are proceses, methods of production, business models, advertising strategies, research methodologies etc name them , that they have learnt either in their instituions of higher learning or that they have experienced at work or during their interactions with various products and services overseas.At the core of this knowledge , it is disparate and most of the time not in structured form. Even visitors abroad have experienced a superior service and transferred them to back into their countries as a new business or enhancing their existing organisations.

Technology transfer might take a similar form to knowledge transfer albeit it might take a more complete form inform of an equipment or a whole complete process. Such for example is what we have witnessed organisations such as Africa Online being formed to do. Multinationals also do this when setting up their own subsdiaries , where they transfer both technology and knowledge from their parent countries.

Cultural transfers is also done by diaspora and this icludes forms of life-style and also cultural norms in organisations in the society. We see those from the trasnfers done by the diaspora Kenyans who have created the coffee drinking movements in urban kenya to the central government that exists today brought forth by colonial regimes from their parent territories. Many other diffussions of culture have been witnessed around the world. These cultural norms affect even the efficiency of many organisations down to the individuals who work in them.

So how do we harness the best of the four major aspects; that would have a value-add in the interactions that diaspora have with their relatives and general Kenyan communities and which might be driven by the sentimental attachment to their land of birth, relatives or even importantly profit-driven?

The 'what' to be transferred depends on what we think can add-value to Kenyans in both the short-term and most important in the long-term.

I see the growth of the economy being a core priority that we need to sort out and key to this is the development of new businesses, new and efficient means of production and the agitation of good governance.

First the infrastructure for knowledge-transfer has become really ideal in the past few years; internet and telco costs have gone down with blogs and interactive sites like this one enhancing those interactions.

To tranlate the knowledge transfereed into actions is another thing altogether.
Remittances for consumption as Emmo states above should not be seen as adding-value to the long-term productivity as per se but there are those aspects that they might influence innovation of various firms. For example the launching of an internet-banking facility by Equity bank ahead of mainstream giants like Barcalys can be credited to its interactions with its customers who are Kenyans abroad.

A business exchange forum is a good beginning where capital and ideas can change hands with Kenyans who are abroad acting as Angel investors and venture capitalists.

At the same time the diaspora kenyans have continued driving investments at NSE and Real-estate. Although pouring money in these two areas without proper information might be damaging. For example
my article on property investments highlights some of the inefficiences in this particular area.

Other Key areas that remittances with an investment motive can target as highlighted in the article the infrastrucutre development side through government infrastrucutre bonds. To translate into actions however the government needs to work on making available these investments products.
All is not lost though, it has been good to seesome really important progress around this area at the March 2007 conference in Kennesaw university
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WHAT ABOUT DUAL CITIZENSHIP?
written by Diasporan , April 18, 2007
By now, they ought to have legalized / enacted dual citizenship. Instead, no action, just empty talk!

Sadly, the importance of dual citizenship is hardly discussed seriously even in Kenyan blogs and news articles. To many Kenyans living abroad, dual citizenship is very important.

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ambiguity sparks discussion
written by Obamab , May 22, 2007
remittances to Kenya: this will only go so far... the Kenyan shilling will get stronger with some of the changes around forex, the dollar is becoming weaker, the largest diaspora population is in the US, do the math.... not very sustainable

dual citizenship allows people who have no vested interest in Kenya have a say in Kenya. citizenship infers settlement,

Diaspora remittance are income supplements at the best, and generally replace lost income in the countries they are directed

we should attempt to imitate the environments accorded to the Indians, Taiwanese, Chinese, Irish and Koreans, who are returning back to their countries and making them better. I Read a story about the father of the Taiwanese semi-conductor industry.. this are people who schooled in the states went back to Taiwan and the rest is history.

slavery was the backbone of the US, when they were an agriculture based economy, the US become the US as we know it after the WWI when industrialization took over (manufacturing took over....)
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what comprises of monetary rem
written by stevo , July 01, 2007
great article.on monetary remittances whose purpose is two fold:
1. Investments
2. consumption,
do the statistics include service businesses such as mamamikes and sambazanow which indirectly channel funds for consumption through vouchers or airtime or do we only count hard cash thats wired through banks and other channels?
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Economic growth
written by Anon , July 02, 2007
Doesn't consumption money spur economic growth? For example if the population has more money to spend, then industry grows in terms of productivity which trickles down to job creation, more taxes (which if used well will build roads, schools, hospitals) etc.
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