Kenya and other African countries (Nigeria, Ghana, Ethiopia) are still the leading, most pricey destination to send money to.
Although Kenya been the largest GDP in eastern and central Africa, Kenyan lives in the USA, UK, Canada, and other countries have to endure expensive means to send money to Kenya.
In the first six months of 2018, Kenyans living in the diaspora sent approximately $1.3 B back home. Although this amount is large, the fee tagged along sending money to Kenya is still high, considering the more you send money to Kenya, the higher the absolute charges.
Ideally, Kenyans residing in the USA, Canada, and other countries send over $1.8 billion each year and averagely $600 each Kenyan.
Each transfer costs 5% more following a lack of proper research on money transfer providers. However, choosing the cheapest way to send money to Kenya can save Kenyans up to $90 million collectively and $30 individually, in a year.
Problems Kenyans in diaspora go through before and while sending money to Kenya
Chloe’s dream was to travel to the United States for further education and later find a lucrative job. She got both. But, she was grateful for the efforts her family made to ensure her dreams come true.
It was now her time to make her family’s dreams come true. She had to start small, and that sends money to Kenya that her family would use to improve their lives. Fortunately, she found a way to send money, but the problem has since then been the exchange rate and transfer rates that banks continue to hike, and that is slowly draining her pockets.
Chloe, just like other Kenyan, works hard in a foreign country to ensure her needs are fulfilled as well as those of her family. Considering she has to work 18 hours a day, sending money to her family shouldn’t be complicated or expensive. For a Kenyan, residing in a foreign country to send money to Kenya, he/she has to work hard and for a long hour to afford her/his life and that of the family back home.
Besides the money the recipient will receive, the sender has to consider a transfer fee based on the bank transfer rates. Ideally, the sender loses 12% of the money they are sending to the transfer fee. This figure is probably higher based on the remarks of the founder of WorldRemit, Ismail Ahmed.
Michael Clemens of the Center for global Development also had the same sentiment regarding the high transfer rate. He believes in an environment as competitive as Africa; transfer rates should be no more than 2, 3, or 4%.
Imagine getting a text at night that your mum or dad need to go to the hospital. The devastation you’ll face considering you have money, yet it can’t reach your parents on time is horrifying. It takes 2 to one week before the money you send to Kenya reaches your family.
Kenyan based freelancer face difficulties when receiving money from abroad clients
Denis is a freelancer based in Kenya and is making good money. However, he still receives less money from his clients, considering that the money has to go through several money transfer system before the payment is finally in his MPesa account.
The MPesa transfer charges, as well as MoneyGram transfer fees, are deducted from the money the client sends a freelancer based in Kenya. Ideally, when a client in a foreign country makes the payment, it has to pass through channels such as PayPal. Consequently, you have to withdraw the money from PayPal to a bank account or MPesa, which requires transfer charges.
Unfortunately, you’ll lose a few dollars before you get the money in your pocket. It’s a regrettable scenario bearing one has to work extensively as a freelancer to earn. Moreover, freelancers spend sleepless nights trying to achieve what their clients want, and it’s only fair for them to receive their pay as exact as client pay.
But, considering how the exchange rate fluctuates, a freelancer receives less money as from intended. For instance, the exchange rate of one dollar to Kenyan shilling is 97, while ideally, the dollar is an equivalent of approximately 103 ksh. The same applies to other platforms such as Upwork and other freelancing platforms.
Also, you have to wait several days before you get your money in your bank account or Mpesa account. Again, this is frustrating if you want to fulfill a need quickly because you have to wait for several days before you receive your cash.
Indeed, Kenyans who send money to Kenya are losing money and will continue to until they choose better methods to transfer money. Moreover, even the Kenyans receiving money from other countries are feeling the pinch. How? A freelancer based in Kenya working with clients from the USA, Canada, or UK has to receive money at the end of a project.
Considering that the exchange rate varies from day to day and the transfer fee tagged along with the money, the freelancer ends up with less money than the original payment. Reflecting on how freelancing a tough adventure is, any freelancer should at least enjoy spending all the money the clients send.
As if the issue of spending more to send money to Kenya and bearing to lose a few more to get the cash in a Kenyan pocket, there are more problems associated with sending money to Kenya.
The shortcoming with Sending Money to Kenya
1. Mastering swift code
When a Kenyan in the diaspora is sending money back home, they need to identify the receiving bank’s swift code. Thus, if one is sending money to a KCB bank in Nairobi, the sender has to use KCBLKENXXXX; the last four digits been the specific code of a particular bank bearing there are several KCB banks in Nairobi.
2. High transfer fee
Some major banks in the UK, USA, and Canada offer money transfer services. But, these services are tagged with high transfer fees, you’d wish to visit home, yourself.
3. Transfer speed
If you want to send money to Kenya to attend an emergency, then sending money to a bank is not an ideal option. Why? Once you initiate the transaction, it will take two to 7 days before the recipient receives the money.
4. Have a bank account in Kenya
If you’re sending money to Kenya, you need to have all the details about the recipient account. Besides the swift code, you need the name of the account, account number, among other information.
5. Money transfers restriction
While you can send any amount of money in a year, each transaction is limited, depending on the means you use to send money. For example, you can send up to $20,000 per transaction, but a bank such as a co-op has a limit of $9,999 per transaction. Check the limit of your bank before you send the money to avoid the failure of the transaction.
Send money to Kenya: Do these problems have solutions?
There exist cheap and expensive currency transfer companies, and your needs will determine the company you choose to work with. For instance, one company can offer expensive transfer costs but ensure the money gets to the recipient on the same day. On the other hand, another company can provide cheap transfer rates and take longer before delivering the money to the recipient.
Moreover, some unreliable companies may end up bouncing back your money, and you have to restart the transaction once again. You have to evaluate which company you want to transact with that ensure you save more money.
Life is challenging for a person working in a foreign country, and the same person should find means they can save money, they worked hard to gain.
For instance, choosing WorldRemit Kenya is ideal as it has partnered with Safaricom to reduce transfer rates and enhance the fast transfer of money. The platform allows first free money transfer, and it’s a good deal if you wish to send money to Kenya yet spend little to zero extra cost.
Another option is Azimo that allows the recipient of money to receive it as cash or liquid cash over the phone or in your bank account.
Learn more about sending money to Kenya
There are many currency transfer providers in the world to smoothen the transaction from one country to another in a different continent.
However, some are good, and some are uneconomical, and you might end up losing money, something you should be saving.
With an extensive guide on how to choose an ideal mobile money transfer provider, you have better chances of saving more money contrary to what you’d do.
Thus, (1) read more about the apps that simplify the money transaction process, (2) save more fees in the process of sending money to Kenya and finally (3) start with your first transaction, e.g. send money to Kenya with WorldRemit.
Choosing WorldRemit, you can send your 100 USD as mobile money, bank transfer, cash pickup or mobile airtime topup. Your receiver will receive 10,125 KSH. With WorldRemit, your first money transfers are free of charge!
Jens Ischebeck is an Africa focused website publisher. The main sites are apps-for-money-transfer.com and Bitcoin-Guide-Africa.com (both cover the international money transfer tools for inward and outward remittances) and distance-education-guide-africa.com (online studying and e-learning).
Author of “Mobile learning in Africa”