- The increased inflows did much to support the country’s forex reserves which consequently increased in the one month period ending March.
- CBK data shows the foreign exchange reserves stood at $7,088 million (Sh924 billion), just about 3.8 months of import cover, during the week ending March 28.
Image: FILE
Kenyans working and living abroad sent home Sh2.85 billion more in March compared to the previous month, according to the latest data by the Central Bank of Kenya.
The weekly bulletin shows remittance inflows for the month amounted to $407.8 million (Sh53.2 billion), a 5.7 per cent increase from the previous month which posted a 6.4 per cent decline from January’s record high of $412.4 million.
Compared to the same period last year when inflows totaled $357.0 million (Sh46.5 billion), the record represents an increase of 14.2 per cent.
“The cumulative inflows for the 12 months to March 2024 totaled $4,380 million (Sh571 billion) compared to $4,020 million (Sh524 billion) in a similar period in 2023, an increase of 9.0 per cent,” CBK says in its weekly bulletin.
The US remained the largest source of remittances to Kenya, accounting for 56 per cent in the period under review.
The increased inflows did much to support the country’s forex reserves which consequently increased in the one month ending March.
Inflows are currently the country’s major foreign exchange earner in support of the reserves.
Data by the apex bank shows the foreign exchange reserves stood at $7,088 million (Sh924 billion), just about 3.8 months of import cover, during the week ending March 28.
It is a 2.4 per cent increase from the first week of the month which recorded $6,919 million (Sh901.8 billion).
The 3.8 is slightly below the statutory requirement of at least four months of import cover, and way below that of the East African Community's (EAC) 4.5 months of import cover.
The regulator however maintains a brave face saying the levels meet CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover.
Reserves are mostly dollar-denominated and act as buffers to potential external shocks for the country.
The reserves have been on a continued downturn sometime last year, hitting the lows of 3.54 months of import cover in December, mainly on the back of the piling pressure of the 2024 Eurobond maturity.
However, the state in February paid back $1.5 billion of the debt, marking a successful settlement of the buyback plan hence boosting investor confidence.
This was after the government successfully issued the $1.5 billion Eurobond for the buyback plan, with the National Treasury confirming in a statement that the issue was to fund the offer.
Increasing inflows is a trend likely to be seen in the better part of this year, as projected by the global lender, the World Bank.
Following a past year of increased remittance flow in Sub-Saharan Africa, the lender anticipates further growth this year, however with some challenges and issues likely to accompany the projection.
Kenya last year received an additional Sh25.9 billion of inflows, riding on the weak shilling as projected by Western Union.
The inflows reached an all-time high of $4.19 billion (Sh670 billion) in the year ending December 2023, compared to $4.03 billion (Sh644.8 billion) in 2022, an increase of 4.0 per cent.
World Bank therefore in its latest migration and development brief dubbed ‘Remittances Brave Global Headwinds with a Special Focus on Climate Migration’, projects a 2.5 per cent growth in remittance flows to Nigeria, the largest remittance recipient in the region, Ghana, Kenya and other Sub Saharan countries this year.
Despite the projection, the lender expresses concern about the potential decline in real income for migrants due to global inflation and low growth prospects.
“Remittance flows to Low and Middle-Income Countries have been resilient, supported by stable labor markets in advanced economies and Gulf Cooperation Council (GCC) countries,” the lender says.
“However, chances of a softening in the growth of remittances to LMICs driven by slowing economic growth and weaker job markets in high-income countries could be inevitable. Additional risks include volatile oil prices, currency exchange rate fluctuations, and the possibility of a deeper-than-expected economic downturn in high-income nations."