INFLATION

Kenyans abroad sent home less money in June - Central Bank data

Cumulatively, diaspora remittances for the first six months of the year to June totalled Sh242 billion.

In Summary

•New data from the Central Bank of Kenya (CBK) shows June's inflows were 6.6 per cent higher compared to $305.9 million over the same period last year.

•Cumulatively, diaspora remittances for the first six months of the year to June totalled Sh242 billion.

A cashier at a Nairobi forex bureau counts dollars and shillings/
A cashier at a Nairobi forex bureau counts dollars and shillings/
Image: FREDRICK OMONDI

Kenyans working and living abroad money sent home $326.1 million (Sh38.6 billion) in June, a 3.2 per cent drop compared to Sh39.96 billion sent in May.

This comes as the world continues to experience economic slowdown impacted by the Russia-Ukraine war.

New data from the Central Bank of Kenya (CBK) shows June's inflows were 6.6 per cent higher compared to $305.9 million over the same period last year.

Cumulatively, diaspora remittances for the first six months of the year to June totalled $2.045 billion (Sh242 billion).

This represents a 16.9 per cent growth in diaspora remittances in a similar period in 2021 when the inflows totalled to$1.75 billion (Sh207 billion).

The strengthened inflows have continued to support Kenya’s current account and stability of the exchange rate alongside improved export earnings this year.

In June, the United States remained the largest source of remittances into Kenya by accounting for 59 per cent of the inflows.

Diaspora remittances now leads as Kenya's top forex earner after agricultural exports and tourism revenues suffered the effects of Covid-19. 

The growth in diaspora remittances marginally increased the country's forex reserve which remained adequate at $7.953 million or 4.59 months of import cover as of July 14.

"This meets the CBK’s statutory requirement to endeavor to maintain at least four months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover," the banking regulator said in the latest weekly bulletin. 

This further stabilised the local currency which marginally weakened against the greenback to close the week at 118.28 compared to 118.03  the previous week. 

A recent survey by the firm indicates education and health remain the leading uses and purposes of sending money back home by Kenyans living abroad, with the US the main market source.

CBK’s data on the other hand shows 20 per cent of diaspora remittance is received by mothers, compared to 10 per cent for fathers. 

Despite economies battling recession fears, remittances are expected to remain resilient.

The World Bank has projected that remittance flows to low- and middle-income countries will increase by 4.2 percent this year to reach $630 billion (Sh74.2 trillion).

The projection is an increase from a previous $565 billion (Sh66.5 trillion) announced in the first quarter of this year.

This follows an almost record recovery of 8.6 percent in 2021, according to the World Bank’s latest migration and development brief, with Kenya being among the biggest recipients in Africa.

Remittances to Ukraine, which is the largest recipient in Europe and Central Asia, are expected to rise by over 20 per cent in 2022.

However, remittance flows to many Central Asian countries, for which the main source is Russia, will likely fall dramatically, World Bank noteD.

These declines, combined with rising food, fertilizer, and oil prices, are likely to increase risks to food security and exacerbate poverty in many of these countries.

“The Russian invasion of Ukraine has triggered large-scale humanitarian, migration and refugee crises and risks for a global economy that is still dealing with the impact of the Covid pandemic,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

Kenya was among top remittance recipient in the first months of 2022 according to data from digital payments service World Remit.

The East African economic powerhouse emerged position two after Nigeria receiving £170 million (Sh24.4 billion) from its citizens abroad in the first half of the year.

Nigeria received £270 million (Sh38.8 billion ) via World Remit as of June 1.

Other top receivers were Zimbabwe,Ghana, Uganda, Tanzania, South Africa and Somaliland.