REMITTANCE

Kenyans in diaspora defy corona to send home more cash in March

Generally, the country’s money market was liquid during the week ending April 23, supported by government payments, which partly offset tax receipts.

In Summary
  • The cumulative inflows in the 12 months to March $2,838 million compared to $2,722 million in the 12 months to March 2019
  • Remittances to Kenya are expected to fall to the lowest level this year, as consequences of the lockdown in Europe due to coronavirus.
A general view shows people walking past the Central Bank of Kenya headquarters building along Haile Selassie avenue in Nairobi, on October 9, 2017. /REUTERS
A general view shows people walking past the Central Bank of Kenya headquarters building along Haile Selassie avenue in Nairobi, on October 9, 2017. /REUTERS

Kenyans living abroad sent home more cash in March compared to the previous month, perhaps to cushion their native families as fears of coronavirus fast spread across the world.

According to the latest weekly statistical bulletin by the Central Bank of Kenya (CBK), remittance inflows for March increased to $228.9 million (Sh22.9 billion) compared to $218.9 million Sh23 billion in February.

The cumulative inflows in the 12 months to March $2,838 million compared to $2,722 million in the 12 months to March 2019, reflecting a growth of 4.3 per cent.

 

''There was no decline, so far, in remittances from the largest sources such as the US and UK. However, the inflows from South Africa, United Arab Emirates, Mauritius and Oman declined, reflecting the impact of COVID-19,’’ CBK said.

Remittances to Kenya are expected to fall to the lowest level this year, as consequences of the lockdown in Europe due to coronavirus. Last year, cash sent from abroad Stood at Sh280 billion.

Despite the increase, the country’s forex reserve continued to dwindle, with the apex bank reporting a total of $7858 million (Sh787 billion) equivalent of 4.75 months of import cover as of Friday compared to Sh791.3 billion able to sustain 4.78 months of imports the previous week.

''This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover,’’ CBK said.

The country’s forex reserve has sunk by over Sh100 billion since January and has been declining every week after the first coronavirus case was reported in the country mid last month.

Diaspora remittances have grown to become Kenya’s largest foreign exchange earner, largely contributing to the country’s forex reserves aimed at stabilising the shilling.

The drop in the forex reserve continues to exert pressure on the shilling which continues to depreciate against the US dollar, pushing up import costs, flaring up the general cost living for consumers as traders pass down the high import bill.

 

''Kenya Shilling eased against major international and regional currencies during the week ending April 23 due to building up in dollar demand. It exchanged at 107.41 per US dollar on April 23 compared to 105.91 on April 16.,’’ CBK said.

Generally, the country’s money market was liquid during the week ending April 23, supported by government payments, which partly offset tax receipts.

Commercial banks’ excess reserves stood at Sh53.9 billion in relation to the 4.25 percent cash reserves requirement (CRR) with the average interbank rate at 4.95 per cent on April 23 compared to 5.93 percent on April 16.

The average number of interbank deals per day, however, decreased to 12 from 18 in the previous week.

The capital market, on the other hand, remained positive during the week, with the NASI and NSE 20 share index increased by 2.2 per cent and 0.1 per cent, respectively. The equity turnover and the number of shares traded also increased by 173 per cent and 148.3 per cent, respectively, following a longer trading week.

The bonds turnover in the domestic secondary market increased by 191.5 per cent, with the 9-year Infrastructure bond tap sale on April 22 receiving bids worth 35.4 billion against an advertised amount of Sh21 billion, representing a performance of 168.5 per cent.