BOUNCING BACK

Kenyans send more money home in May as countries ease covid-19 restrictions

Exports of good by Kenya improve by 4.1 per cent in the period January to May mainly driven by tea, horticulture and re-exports.

In Summary
  • Kenyans in South Africa sent homeSh24.4billion in May an increase from  Sh22.1billion) in April
  • Last year, cash sent from abroad Stood at Sh280 billion.
The Central Bank of Kenya.
INTEREST RATE CAP: The Central Bank of Kenya.
Image: FILE

Kenya’s diaspora remittances inflows recovered in May 2020 to $258.2 million (Sh25.8 billion) from $208.2 million (Sh20.8 billion) in April as most countries in the world eased coronavirus restrictions.

The 24 per cent jump saw the cumulative inflows in the 12 months to May hit $2,816 million (Sh281.6 billion) compared to $ 2,739 million (Sh273.9 billion) in the 12 months to May 2019, reflecting a growth of 2.8 percent.

The growth is against Central Bank of Kenya’s prediction in April that the country will 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.

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

The highest increases in inflows came from South Africa and the USA. Kenyans in South Africa sent home $258 million (Sh24.4billion) in May an increase from $208 million (Sh22.1billion) in April as the country eased its lockdown.

Other significant increases were realised from Saudi Arabia, the United Kingdom, Qatar, Australia and Switzerland.

The seemingly growing activities in the international market also saw exports of good by Kenya improve by 4.1 per cent in the period January to May mainly driven by tea, horticulture and re-exports.

The volume of tea exports increased by 23.5 per cent. Horticulture exports were at normal levels, mainly due to a pickup in demand and easing of supply restrictions in key destination markets, and increased cargo capacity.

As a result, receipts from tea and horticulture exports increased by 15.2 per cent and 22.7 per cent, respectively, in May 2020 compared to a similar period last year.

The growth saw CBK governor Patrick Njoroge predict the bouncing back of the economy but cautioned against recklessness, insisting that health is paramount.

“While growth was weak in Q1, production of tea and export of tea and horticulture, Kenya’s key foreign exchange-earners, has been strong between May and June,” said Njoroge, “By all indications, the economy is bouncing back,’’ Njoroge said.

“We do not want to be bullish, I would even say it’s foolish to say the worst is behind us. We need to be cautious. At the end of the day, it’s not GDP that matters,’’ he added.

The growth in diaspora inflows and exports boosted the country’s forex reserve, which remained adequate at $9,229 million or 5.55 months of import cover as of June 25, a slight drop compared to $9,278 million or 5.58 months of import cover reported the previous week.

‘’This meets the CBK’s statutory requirement to endeavour 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 in its weekly bulletin.

The strong forex reserve cushioned the shilling against global volatility, firming against major international and regional currencies during the week ended Friday.

The local currency however lost some ground against the greenback, exchanging at Sh106.40 compared to Sh106.32 the previous year.