Diaspora Remittances To Kenya Drop By 5.1 Percent

Diaspora remittances are an important contributor to the country’s growth and development. Remittances are Kenya’s largest source of foreign exchange ahead of horticulture, tea, coffee, and tourism.

The US remains the largest source of remittances to Kenya accounting for over 60 percent every month. Other significant contributors are European Countries like UK, Germany, and London.

According to the Central Bank of Kenya Report, Remittances to Kenya dropped by 5.1 percent from USD 338.72 million to USD 321.53 million in the month of February 2022.

The February remittances are equivalent to Kshs 36.6 billion. This is 23 percent more than the remittances made in February 2021. Over the same period last year, Kenyans remitted back home USD 260.29 million .which is equivalent to 29.67 billion shillings.

The total remittances sent into Kenya in the month of January were USD 321.53 million in the month of January which was a decline from the total remittances of 350.26 for the month of December 2021. During the festive season, last year diaspora remittances hit an all-time high in a single month.

Remittance inflows to Kenya increased by ten times in the last 15 years reaching an all-time record of USD 3,718 million in 2021. This phenomenal growth points to the importance of remittances as a source of foreign exchange to the country, equivalent to more than 3 percent of Kenya’s GDP.

Remittance flows also provide livelihoods to vulnerable households by contributing to basic needs such as food, education, healthcare, and housing. In this context, there is a need to better understand diaspora remittances and mainstream them into the country’s development process

The Central Bank of Kenya conducts a survey on remittance inflows every month through formal channels that include commercial banks and other authorized international remittances service providers in Kenya.

“Despite the significant role of remittance flows, its data has previously not been fully captured. Currently, the Central Bank of Kenya (CBK) collects data every month on remittance inflows through formal channels that include commercial banks and other authorized international remittance service providers in Kenya. The reported amount excludes remittances through informal channels and in-kind remittances. The Diaspora Remittances Survey, therefore, represents an additional step in the CBK’s initiatives to improve statistics on remittances and understanding the landscape for remittances more generally, “said CBK Governor Patrick Njoroge.

Remittance flows to Kenya are remitted monthly to family members and largely cater to basic household needs such as food, household goods, medicine, and payment of education expenses. The majority of recipients are self-employed, unemployed, or students, suggesting a relatively high dependency ratio of Kenyans on the diaspora. Slightly over half of the remittance amounts were allocated to investment in real estate for recipients, mortgage payment for senders, and purchase of food and household goods.

The advancement in Digital service providers is a key driver to growth in diaspora remittances into Kenya due to convenience, efficiency in terms of speed or prompt service, and being easily accessible. Recipients currently receive the money sent on the same day as a result of the high efficiency of these Digital channels.