Diaspora Remittances and Financial Inclusion in Kenya

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Date
2020-04Author
Arthur, Emmanuel Kwesi
Musau, Salome Mwongeli
Wanjohi, Festus Mithi
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This study examined the effect of diaspora
remittances on financial inclusion in Kenya for a quarterly
period from 2008 to 2018. The Kenyan government’s
commitment to include the Kenyan diaspora into the national
development process led to the launching of Kenyan Diaspora
Policy in 2015 as part of the Kenya’s vision 2030 blue print of
which financial inclusion is a pillar. This study sought to check
if the policy interventions achieved its objective by testing the
moderating effect of Diaspora Policy on the relationship
between diaspora remittances and financial inclusion. The
descriptive research design specifically longitudinal and
explanatory non-experimental designs were employed in this
study. The target population for this study comprised the three
million Kenyans living at the diaspora. The census and stratified
sampling design were utilised where census method was first
used to include the formal diaspora remittance inflows for the
forty four quarterly period and then stratified into corridors for
the period under study. Data from the Central Bank of Kenya
and Kenya National Bureau of Statistics were analysed using
time series multiple regression model. The results of the study
showed that formal diaspora remittances received had a positive
and statistically significant effect on financial inclusion. Formal
diaspora remittances from Rest of the World greatly influenced
financial inclusion. Remittance inflows from North America also
influenced financial inclusion to some extent while formal
diaspora remittances from Europe had no effect on financial
inclusion in Kenya. Further, the study established that the
moderating effect between formal diaspora remittances and
financial inclusion was positive and statistically significant
implying that the diaspora policy implemented by government
greatly influenced diaspora remittances and financial inclusion
in the right direction in Kenya. The study recommended among
others, that government of Kenya continues to strategically
strengthen the diaspora policies in order to increase the flow of
diaspora remittances into the country to boost financial
inclusion.