Treasury has been asked to tap funds held by Kenyans working and living abroad as an alternative financing source for development projects through diaspora bonds.
Kenya Diaspora Alliance (KDA) chairman Shem Ochuodho said the bonds would help the Treasury battling a deficit due to heavy spending and high borrowing rates to diversify sources of funding.
“It is an innovative way to tap the huge resources held by Kenyans in the diaspora,” said Mr Ochuodho.
Mr Ochuodho whose alliance says it represents 44 associations in different countries cited the massive resources required to build the Sh1.2 trillion Lamu Port-South Sudan-Ethiopia Transport (Lapsset) as a possible beneficiary of such bonds.
“Let Treasury build the buy-in for the bond,” he said.
Kenya has committed to borrowing billions of shillings to finance mega public infrastructure projects, including the ongoing construction of the standard gauge railway (SGR) line.
The country has in the past five years borrowed billions of shillings to finance power generation and road construction projects and recent forecasts indicate that the borrowings could soon take the debt load past 60 per cent of GDP.
Kenya issued its debut Eurobond in 2014, borrowing a total of $2.75 billion in the initial issue and a subsequent tap sale. In the wake of the successful Eurobond, the Government has said it is looking at various options for another sovereign bond, including interest-free Islamic bonds, known as sukuk, and yen-denominated debt instruments or samurai bonds.
Treasury has in the past marketed infrastructure bonds to citizens living abroad but has not specifically issued a bond targeting the community.
Kenyans working and living abroad are now sending home four times more cash than a decade earlier, official statistics show, underlining the importance in growing national wealth.
Nearly Sh260.23 billion ($2.55 billion) was remitted by the diaspora community in 12 months through last August compared to Sh63.42 billion in the same period in 2008, data by the Central Bank of Kenya (CBK) indicates.