Diaspora bonds to help Kenyan government

The Kenyan government has come up with a diaspora bond that will help it to increase the amount of remittances to the development projects and act as a source of cheap credit to the government. Considering the fact that a large amount of the remittances is spent on direct consumption and not on long term investments and savings, this move is expected to play a big role in the development of the country.

 

The World Bank in recent times has been promoting efforts like these to help the African countries to set up financial institutions. The bonds in Kenya are expected to be set up later in the year. The idea is to develop a financial instrument that would enable the Central Bank to use remittances as collateral bond issues and loan securitisation.

 

No other African country, except Ghana has issued a diaspora bond. The diaspora bonds are considered viable opportunity for repatriating Africa’s flight capital, estimated at more than $170 bn by the World Bank.

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