How the Kenyan Diaspora Can Build Financial Security with Money Market Funds

Money market funds are becoming an increasingly preferred investment option for Kenyans living abroad seeking a secure and regulated way to grow their savings.

Remittances from the Kenyan diaspora significantly contribute to the national economy, yet many face challenges in managing their funds safely and effectively. Traditionally, these investors have depended on relatives or friends to handle money intended for property, business, or long-term savings. 

However, such informal arrangements often falter due to conflicting priorities, emergencies, or poor financial management, resulting in stalled projects and lost savings. In response, money market funds (MMFs) have emerged as a viable alternative. 

Licensed and regulated by the Capital Markets Authority (CMA), these funds offer transparency, professional management, and investor protection through strict regulatory oversight. This regulatory framework ensures regular reporting, fund security, and safeguards unavailable in informal investment channels.

Unlike ordinary savings accounts, which often provide returns below inflation, MMFs invest in short-term, low-risk instruments such as Treasury bills, high-quality corporate bonds, and bank deposits. This approach delivers competitive returns while maintaining liquidity, with investors typically able to access their money within 24 to 48 hours.

Recent data shows Kenyan MMFs yielding annual returns between 9 and 11 percent, far surpassing typical savings account interest rates. For instance, a Sh1 million investment earning 10 percent after tax yields approximately Sh85,000 annually, over four times the typical bank return. 

Over three years, this investment can grow to about Sh1.28 million, while Sh5 million can increase to Sh6.4 million, assuming no additional contributions. Regular monthly deposits further increase returns. A steady monthly investment of $500 (about Sh65,000) in an MMF with a 10 percent annual return could accumulate nearly Sh1.73 million in two years and Sh2.7 million in three years. 

Such growth supports long-term goals including land acquisition, education funding, or business start-ups. MMFs prioritise stability over rapid gains and are suited to investors seeking predictable returns. The funds operate under a three-tier oversight system comprising a fund manager, custodian bank, and independent trustee, ensuring that investments remain secure and focused.

This shift towards regulated investment vehicles among the diaspora aligns with Kenya’s broader objectives of enhancing financial inclusion and mobilising diaspora capital for national development.