Kenya has one of the highest remittances in the region. Last year saw the value of remittances jump to over US$200 million, the volume has been on the rise this year also. According to the World Bank housing sector stock taking report, remittances can be used to significantly improve the overall welfare of households in Africa.

This can result in an increase in the expenditures on housing or savings for the same. By making effective use of remittances, households will be able to direct these funds towards land purchase, construction, home improvement and rent.

One way, the report suggests is the securitization of future remittance flows in order to leverage more external financing. These would generate more funds for low‐income housing and infrastructure projects. This is proposition is also backed by the evidence pointing to the contribution of remittances in enhancing local economies and increasing their borrowing capacity.

Although data on the use of remittances to finance housing activities in Sub-Saharan Africa is rare, a 2011 project by the World Bank’s, The Africa Migration Project, outlined how countries in Sub-Saharan Africa use remittances to finance housing obligations which include renting, home construction, land purchase and home improvement.

The project analysed remittances in five countries; Kenya, Nigeria, Uganda, Senegal and Burkina Faso. The remittances include domestic remittances, remittances from within Africa and from without Africa.

The study found that in Kenya, 7.4 per cent of domestic remittances are used to pay rent while house construction, improvements and land purchase each get 1.3 per cent.

For remittances originating from within Africa, only 0.4 per cent of those were used to pay rent, a larger percentage (27.5) was used for home construction while home improvement and land purchase took 3.1 per cent and 7 per cent of the funds respectively.

Also in the findings, Kenyans used a larger portion of remittances from outside Africa to finance home construction at 11.2 per cent. Land purchase consumes 8.4 per cent of the funds while rent and home improvement are allocated 5.7 per cent and 5.3 per cent respectively.

The project revealed that for Kenya, the biggest source of foreign remittances invested in housing were from within Africa while in Nigeria and Uganda they were from outside Africa.