COMPARATIVE ANALYSIS OF DIASPORA REMITTANCE TRANSFER CHANNELS IN PROMOTING ECONOMIC DEVELOPMENT IN KENYA
Abstract
Purpose of Study: The purpose of this study was therefore to conduct a comparative analysis of diaspora remittance transfer channels in promoting economic development in Kenya using a desktop review methodology.
Problem Statement: Remittance inflows in Kenya reached approximately USD 4.19 billion in 2023, accounting for over 3 percent of GDP and exceeding earnings from key export sectors. Despite this growth, challenges including youth unemployment, poverty, income inequality, and structural economic imbalances raise concerns regarding the extent to which remittance inflows are effectively translated into serious economic development.
Methodology: The study adopted a desktop review methodology, guided by a development economics perspective to review peer-reviewed journal articles, institutional reports, policy documents, and empirical studies focusing on remittance channels, financial intermediation, digital inclusion, macroeconomic performance, and regulatory frameworks.
Result: Formal and regulated transfer channels including commercial banks and digital platforms, demonstrate stronger associations with financial inclusion, deposit mobilization, credit expansion, and sectoral multiplier effects compared to informal channels.
Recommendation: The Government of Kenya through the Central Bank of Kenya, financial institutions, fintech providers and diaspora engagement agencies should support formal remittance corridors, reduce transaction costs, promote financial literacy, and integrate remittance management into national development planning frameworks.
Keywords: Diaspora Remittances; Remittance Transfer Channels; Financial Intermediation; Economic Development; Financial Inclusion; Kenya
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