Why Kenyan government is introducing mandatory diaspora fund on migrant workers
4 min read
Kenya introduces mandatory welfare levy for all citizens living abroad diaspora fund to address migrant workers' concerns
Kenya introduces mandatory welfare levy for all citizens living abroad diaspora fund to address migrant workers’ concerns.
Kenyans living and working abroad will be required to contribute to the government welfare scheme for migrant workers if a proposal by the Ministry of Labour is approved.
This Policy on the fund has been developed in recognition of the urgent need to mainstream the Kenyan Diaspora into our national development process in line with the aspirations and goals of the Kenya Vision 2030.
The Kenya Vision 2030 recognizes the Diaspora contribution as a major enabler to the growth of our economy and a critical factor in the achievement of our overarching vision of a globally competitive and prosperous Kenya by the year 2030.
It is in recognition of this imperative that the development of a Diaspora Policy was identified as one of the Kenya Vision 2030 flagship projects.
Furthermore, Diaspora Diplomacy is now one of the pillars of the Kenya Foreign Policy.
In a new proposal released by the Ministry of Labour, the mandatory scheme will see every Kenyan traveling abroad for employment register as a member.
The levy will offer benefits, including medical assistance, relief assistance, and survivor benefits to migrant workers.
The survivor benefits will go to the family of a migrant worker who dies while still working abroad.
The scheme is dubbed Kenya Migrant Workers Fund and also requires private employment agencies to contribute contingency fees to the kitty.
Labour Principal Secretary Geoffrey Kaituko revealed that the government will also contribute a certain percentage to the fund.
“This is an innovative fund to address the plight of migrant workers. The government shall also put in some funds.
“The deduction will be of benefit to the migrant workers, and they would be able to access it in their hour of need,” said Katuko.
Kaituko noted that the rate of contribution by each migrant worker will be published later.
This came as the country recorded an increase in diaspora remittances from the more than four million migrant workers abroad.
Kenyans living and working abroad sent home over KSh 48.9 billion for the year ending June 2023 as the shilling continued to weaken against the US dollar.
In July 2023, the government announced plans to create the Diaspora Fund to help Kenyans living and working abroad save back home.
Deputy President Rigathi Gachagua told Kenyans living in Italy that the kitty will be similar to treasury bonds and bills, guaranteeing huge returns.
Gachagua spoke on Monday, July 24, during his visit to Italy for the United Nations (UN) Food Systems Summit.
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Lead market analyst at FX Pesa Rufas Kamau said the government is leaning towards diaspora remittances to shore up its forex reserve.
“The Kenyan government is facing an unprecedented shortage of the dollar and is doing everything to shore up its import cover.
“After the S&P Global Stanbic Kenya PMI index showed slowing business activity in the private sector, the government is now more inclined to depend on diaspora remittances for dollar supply,” said Kamau in an exclusive interview.
It is evident that the government is relying heavily on Kenyans to shoulder the burden of a Sh3.6 trillion budget.
To address the budget deficit, the president introduced the Finance Bill 2023 to alleviate the debt burden
However, the bill alone cannot guarantee Kenya’s economic recovery and self-reliance.
Additional measures need to be implemented to generate revenue and reduce loan dependency and one such avenue is the Kenyan diaspora.
President Ruto recognizes the potential of the diaspora to contribute to economic development.
Upon taking power, Ruto established the Ministry of Foreign and Diaspora Affairs and the State Department for Diaspora Affairs to demonstrate the government’s acknowledgment of the diaspora’s contribution and its determination to harness it.
Remittances from the diaspora have overtaken traditional exports like tea, coffee, and horticulture, making it the top foreign exchange earner.
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