INFLOWS

Diaspora remittances remain strong at Sh33.1bn in June

Technology, affordability and convenience to shape second half, according to WorldRemit.

In Summary

•The cumulative inflows in the 12 months to June 2021 totaled $3.38 billion , a 20.3 per cent jump compared to $2.81 billion same period in 2020. 

•Education, healthcare, and household needs are the main uses of remittances in Kenya, an analysis by global payments company, WorldRemit, indicates.

A customer using a money payment App/FILE
A customer using a money payment App/FILE

 Kenyans working and living abroad sent home $305.9 million (Sh33.1 billion) in June, with the US remaining the largest source of the inflows into the country.

This is about six per cent more when compared to the $288.5 million (Sh31.2 billion) sent home in a corresponding month last year, Central Bank of Kenya (CBK) data shows, with sector players projecting even a stronger performance in the second half.

The cumulative inflows in the 12 months to June 2021 totaled $3.38 billion (Sh365.6 billion), a 20.3 per cent jump compared to $2.81 billion (Sh303.9) billion same period in 2020.

“The United States continues to be the largest source of remittances into Kenya, accounting for 58.8 percent of remittances in June 2021,” CBK notes in its Friday bulletin.

The high volumes come as Kenyans in the diaspora continue to provide a crucial lifeline to the local economy.

Remittances hit a record high of $315.8 million (Sh34.2 billion) in May this year, the highest amount in any month on record since the regulator started publishing remittance data, several years ago.

The largest source country for remittance inflows into Kenya was the US, accounting for 57.8 per cent or $182.6 million (Sh19.7 billion) of the total inflows.

Other significant source markets include the UK, Germany, and Canada. Gulf states such as Saudi Arabia, United Arab Emirates, Qatar, and Bahrain have also emerged as important drivers of remittances.

This is in line with the growing number of Kenyans immigrating to these countries in search of jobs.

Tanzania, Uganda, and South Africa lead as the top African source markets for remittance inflows into Kenya.

Remittances not only represent an important source of forex but also support many livelihoods.

Education, healthcare, and household needs are the main uses of remittances in Kenya, an analysis by global payments company, WorldRemit, indicates, sectors that tend to have a multiplier effect on development.

“Education is likely to remain a key use of remittances, and this will only increase with the packed school calendar post-covid,” said Sharon Kinyanjui, Director Europe, Middle East, and Africa Receive Markets at WorldRemit.

For the second half of 2021, trends that are expected to shape the remittance industry include technology, affordability, and convenience, the firm which has cemented its position as a key payments company notes.

The fusion of finance and technology has led to the emergence of dozens of local and international payments apps that compete on pricing and convenience.

“Affordability and convenience remain the top priorities for most people sending and receiving money across borders. Over the past year, we’ve focused on meeting these priorities and ensuring an affordable service for our customers,” Kinyanjui said.

WorldRemit, which has a presence in more than 150 countries, in 2020 processed over 50 million customer payments worth approximately $10 billion (Sh1.08trillion) in total.

Meanwhile, the CBK, Kenya National Bureau of Statistics, and the Ministry of Foreign Affairs have converged efforts to capitalise on the rising remittance inflows into Kenya, including publishing more granular remittance data that can inform policy making.

The Ministry of Labour has also launched an initiative to secure more than 30,000 new jobs for Kenyans in Gulf States, a move that could potentially lead to increased remittances from these countries.