Societies woo Kenyan investors in diaspora

Jackson, who prefers to use one name, is a Kenyan living in Texas, USA. He was introduced to an investment cooperative in Kenya by a friend, who is a member.

The performance of the cooperative, based on its reports, encouraged him. He now earns annual income of $160,000, an equivalent of Sh12.8 million.

“Getting reliable and honest partners who can represent our interests on the ground can be a challenge,” he says. According to Jackson, many Kenyans living abroad have been disappointed by agents, relatives, and friends they have entrusted with investment money.

So far, Jackson says he is happy with the services of Safaricom Investment Cooperative (SIC), except that he would prefer that the organisation specifically sets up a diaspora department to deal with their unique issues.

Cooperatives are becoming the vehicle of choice for real estate investors, especially those living in the diaspora.

According to SIC marketing manager, Ms Joyce Nyambura Macharia, last year’s remittances from Kenyans living abroad increased significantly. She believes cooperatives held the key in attracting the money.

Data from the Central Bank show that diaspora remittances were about Sh50 billion in the first six months of 2012, up from Sh34 billion in 2011. This marked a 47 per cent rise in the first six months of 2012.

According to a Stanbic Investment Management Services report, diaspora remittances have contributed more than Sh251 billion to the Kenyan economy in the past five years.

Cooperatives offer good returns that remain unmatched by banks. The fixed rate of return is 13 per cent, a figure that is within the market ranges of between 12 per cent and 14 per cent, which when reinvested would give a higher principle, says Ms Macharia.

The Safaricom Cooperative released its common bond two years ago and invited non-staff members to invest. In 2005, members enjoyed a dividend of five per cent. This rose to 42 per cent in 2010.

The highest dividend paid out was 45 per cent in 2011. It drastically dropped to 28 per cent in 2012, a situation attributed to the election season.

Though investors were not keen on buying land, there was much more stock than in the previous year. With a membership of 1,600 to 1,700 persons, five per cent of the members are from the diaspora while 80 per cent consist of Safaricom staff.

The share value growth in 2009 was at Sh100. This has grown to Sh230 in 2013. The total assets in 2012 rose to a value of Sh503,783,598, up from Sh19,805,056 in 2009.

“Kenyans in the diaspora are keen to invest at home, but they are most vulnerable to fraudsters because they are not present to fully engage in their projects… Some get land prices quoted higher than the real value of the parcel,” says Ms Macharia.

Most of these investors are from the US, South Africa, UK, and the United Arab Emirates. Prudence is key in any investment acquisition, but more so in buying land.

Buying property through a cooperative means that the organisation handles all the due diligence, including the payment of fees to lawyers, architects, and contractors. -Daily NATION