NAIROBI, June 8 (Xinhua) -- The UN International Fund for Agricultural Development (IFAD) and the European Union on Thursday launched two new initiatives in Kenya to boost rural development by making the use of digital remittance flow faster and cheaper
Under the EU-funded PRIME Africa initiative, IFAD has allocated two grants to Credit Bank and Financial Sector Deepening Kenya (FSD Kenya), two financial institutions operating within Kenya's remittance ecosystem.
IFAD said in a statement issued in Nairobi, the capital of Kenya, that the grant projects aim to empower rural communities and stimulate economic growth, while they complement the ongoing regional project, which is carried out in collaboration with MFS Africa, a digital payment service provider.
"Digital technologies are driving transformative change and opening avenues towards economic growth and efficiency, but they do not automatically benefit all in the same way. As Team Europe in Kenya, we want to offer the means to create a digital future where technology truly serves the people," said Henriette Geiger, EU ambassador to Kenya.
The collaboration will focus on reducing transaction costs, promoting financial inclusion in rural areas, and will work closely with Savings and Credit Cooperative Organizations (SACCOs).
Geiger said this action, co-funded by the EU under the PRIME Africa initiative which enhances the financial resilience and economic empowerment of remittance families, is a great example of leveraging partnerships between SACCOs, fintech and banks to deliver better financial inclusion and cheaper remittances in line with our SDG commitments," Geiger added.
According to recent data from Kenya's Central Bank, the country stands as the third-largest recipient of remittances in sub-Saharan Africa.
Remittances serve as a stable source of income and a means of resilience for households.
In 2022, international remittance flows to Kenya reached a record-breaking 4.02 billion U.S. dollars, representing 3 percent of the nation's gross domestic product (GDP).
Pedro de Vasconcelos, Manager of the Financing Facility for Remittances at IFAD, said they are committed to promote faster, safer and cheaper transfer of remittances.
"Digital remittances are key to fostering financial inclusion while they pave the way for migrants and diasporas to fully contribute to the sustainable development in their countries of origin," Vasconcelos said.
FSD Kenya, in collaboration with SASRA, will undertake extensive research to evaluate the capabilities of SACCOs in catering to remittance users in rural Kenya.
The findings of this research will play a crucial role in shaping public policies and identifying innovative models that enable SACCOs, alongside their financial partners such as banks and fintech companies, to facilitate greater access to digital remittances for rural SACCO members.