Effect of diaspora remittances on real estate growth in Kenya

Abstract

Kenyans in the Diaspora are constantly sending money home. Experts call this money, the Diaspora remittance. The Government of Kenya recognizes the key role that Kenyans abroad play in the development of our nation. However, this huge potential remains largely untapped. To successfully harness this potential, the government has committed to involving Kenyans abroad in the national development agenda, their role in the realization of the Kenya Vision 2030 is recognized especially in driving investments in the priority sectors of the economy such as education, financial services, health, housing, ICT enabled services, Business Process Outsourcing (BPO), manufacturing and tourism. This study therefore sought to investigate the effect of Diaspora remittances on real estate sector growth in Kenya. Further, the study investigated whether GDP, Unemployment (% of total labor force), Inflation and Interest rates also affect the real estate sector growth in Kenya. The study used a descriptive research design covering a period of ten years from 2004-2013. Secondary data was collected and was then analyzed using SPSS and Microsoft Excel statistical soft wares. The findings showed that diaspora remittances, Unemployment, GDP and lending interest rates negatively impacts on the real estate investment in Kenya. However inflation rate has a positive effect on the real estate investment in Kenya. The study concludes that at 5% level of significance, diaspora remittance, Unemployment, GDP, inflation rate and lending interest rates are not statistically significant in affecting real estate growth in Kenya. The study recommended that the regulatory authorities of macroeconomic variables should regulate them in such a way that they lead the economy towards the growth. Future scholars can do a similar study on other firms besides the real estate firms in Kenya, for instance, the banking industry, the insurance industry among others. Upcoming studies can also cover a longer study period which can reveal more sufficient and conclusive information on how changes in the values of diaspora remittances affect the growth of firms.