REMITTANCES

Kenyans abroad send more money home in October

Last month's remittances totaled $263.1 million (Sh28.8 billion).

In Summary

•The highest Kenyans have sent home this year was however $288.5 million (Sh31.62 billion) remitted in June.

•The lowest remains April where $208.2 million (Sh22.8 billion) was sent home.

The US Dollar notes/FILE
The US Dollar notes/FILE

Kenyans living abroad sent home $3.8 million (Sh 416.5 million) more last month compared to September, as 12-months cumulative inflows to October hit Sh329.5 billion.

Last month's remittances totalled $263.1 million (Sh28.8 billion), an increase from the previous months $260.7 billion, as the diaspora community continued to play a critical role in cushioning the local economy and households from Covid-19 shocks.

“Remittance inflows remained strong in October 2020 amounting to USD 263.1 million compared to USD 224.3 million in October 2019, a significant increase of 17.3 percent,” Central Bank of Kenya, led by governor Patrick Njoroge, says in its weekly bulletin.

 

The highest amount Kenyans have sent home this year was $288.5 million (Sh31.62 billion) remitted in June, with the lowest being in April where $208.2 million (Sh22.8 billion) was sent.

This was the height of the Covid-19 impact global economies, with Kenya reporting its first case on March 12.

Remittances in August and July were $274.1 million (Sh30.04 billion) and $276.9 million (Sh30.34 billion), respectively.

The high value of remittances compared to last year is an indicator of Kenyans abroad being more supportive and keen to cushion loved ones at home from the impact of the pandemic.

Millions of Kenyans have been rendered jobless while those lucky to remain in employment have had to live with low income as a result of salary cuts across sectors.

The cumulative inflows in the 12 months to October totalled $3.006 billion (Sh329.5 billion) which is higher compared to the $2.792 billion (Sh305.9 billion) sent in the 12 months to October 2019.

Kenyans in the US lead in sending money home, with remittances playing a key role in cushioning the economy, mainly helping narrow the country’s current account deficit.

Europe and the rest of the world also remain strong on sending money home, a move that comes as a relief at a time when receipts from services exports remained subdued, declining by 22.4 per cent in the period to August 2020.

 

This mainly due to a reduction in international travel and transport.

CBK however notes that the decline is offset by the prevailing low international oil prices witnessed this year.

The current account deficit is projected at about 5.1 per cent of GDP in 2020.

“It is currently at 4.7 per cent of GDP (12 months to July 2020), compared to 5.0 per cent in the 12 months to June,” governor Njoroge noted in the last Monetary Policy Committee meeting.

Financial Risk Analyst Mihr Thakar however notes that continued high inflows, despite Covid-19 impact on economies abroad, is an indication of high dependency back home with a weak saving culture by Kenyans in the diaspora.

The fact that the inflows continued unabated, and in fact expanding on a 12 month cumulative comparison, suggests the resilience of the diaspora skill set,” he added.

There is also a likeliness of a "consumer trap" locally, whereby recipients of diaspora inflows are quick to spend the money, while the diaspora community continues to transfer money during lock-downs abroad.