Saving and Credit Cooperatives have been encouraged to tap into the International Fund for Agricultural Development (IFAD), Financing Facility for remittances to reduce cost of diaspora inflows.

IFADs Remittances and Inclusive Digital Finance Officer David Berno says the Ksh 2 billion facility will, among other benefits, ease the effects of the increased remittance taxation by the United States in rural areas.

Diaspora remittance hit Ksh 325 billion in the first half of this year, representing a 5.8pc increase from the same period last year.

According to IFAD the numbers could be higher if remittance costs were reduced from the current high of 12pc.

The Fund is seeking to reduce the remittance cost to at least 3pc in the next five years through the funding that will among other services increase digital solutions for sending and receiving remittance money.

Saccos have been encouraged to tap into the fund and create partnerships to play a role in the diaspora remittance rural supply chain.

Reduced remittance costs is also earmarked to offset the effects of higher remittance taxation by the US government.

Lenders have also been encouraged to create products that will attract more investment from the Kenyan Diaspora.