Diaspora Kenyans sent home Sh1.4bn less in April

Kenyans working and living abroad sent home Sh1.4 billion less in April compared to the previous month.

Latest figures by the Central Bank of Kenya show remittance inflows for the month amounted to $397.3 million (Sh52.14 billion), a 2.6 per cent decline from March which recorded $407.8 million (Sh53.5 billion).

Compared to the same period last year when inflows totaled $320.3 million (Sh42 billion), the record represents a 24 per cent increase.

"The cumulative inflows for the 12 months to April 2024 totaled $4,457 million (Sh584.9) compared to $3,985 million (Sh523 billion) in a similar period in 2023, an increase of 11.9 per cent," CBK says in its weekly bulletin.

The US remained the largest source of remittances to Kenya, accounting for 49 per cent during the period under review.

April’s decline comes after a 5.7 per cent increase in March, from February’s total which marked a 6.4 per cent decline from January’s record high of $412.4 million.

Although the apex bank did not give reasons for the decline, the relatively high inflation in the US where most remittances originate might have shrunk senders' disposable income.  

Surging gas prices and sky-high mortgages and rent sent inflation rising more than expected in March, adding to Americans’ prolonged and painful battle with high costs.

That could force the Federal Reserve to keep its punishing rates higher for longer.

The US consumer prices picked up again last month, vaulting to a 3.5 per cent increase for the 12 months that ended in March, according to the latest Consumer Price Index data released Wednesday by the Bureau of Labor Statistics.

Further, the shilling’s exchange rate against the dollar has not been stable in the period under review to dictate a specific leverage trend that workers abroad capitalize on when deciding to send money back home.

Western Union’s inaugural Global Money Transfer Index says about 67 per cent of Africans abroad send more money when the currency value falls in their receiving country, with 65 per cent of receivers agreeing that when currency values fall, they get more money.

In other terms, a weakening greenback against the local currency means receivers back home are not earning more in exchange as they used to be when the shilling was on a depreciating trend.

CBK at the end of the month under review quoted the Shilling at 133.27, having weakened by about two unit values from the beginning of the month.

The local currency however recorded a dramatic gain and loss trend throughout the four weeks, leaving diaspora Kenyans with the hard task of predicting whether to hold on to their money and await the dollar to appreciate further or send before it depreciates more.

The local currency traded against the dollar at averages of 130, 131, 132 and 133 throughout the month.

CBK on Thursday last week quoted the shilling at 131.25, having gained about 29 units from the lows of 160 in January.

It officially crossed the 160 mark on January 15, the lowest level on record, with the apex bank blaming depreciation on the $2 billion Eurobond pressure due in June 2024.

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 resulting in the appreciation of the shilling against the US dollar.

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.

Inflows for April did play a key role in supporting the country’s Forex Reserves which increased by Sh11 billion in the one month to April 25.

Official data shows usable foreign exchange reserves increased to $7,232 million (Sh949.2 billion) in the week ending April 25, just about 3.8 months of import cover, from $7,148 million (Sh938.2 billion) on April 4.