- Latest CBK data shows Kenyans in the diaspora sent home $312million (Sh34.4billion) in August, down from $336.7 million(Sh37.1billion) sent in July.
- The apex bank said the drop was attributed to seasonal factors such as the pandemic.
Diaspora remittances sent into the country shrunk by 7.1 per cent last month, as migrants continue to suffer from the economic effects of the Covid-19 pandemic.
Latest CBK data shows Kenyans in the diaspora sent home $312million (Sh34.4billion) in August, down from $336.7 million(Sh37.1billion) sent in July.
The apex bank said the drop was attributed to seasonal factors such as the pandemic.
Despite the monthly drop, this is a 14.2 per cent increase when compared to August 2020 , Kenyans in the diaspora sent $274.1million (Sh30.2billion) during that period.
The cumulative inflows for the 12 months to August 2021 totalled $3,481 million(Sh383.6billion) compared to $2,921 million(321.8billion) in the same period in 2020, a 19.2 percent increase.
The United States continues to be the largest source of remittances into Kenya, accounting for 46.8 percent in August 2021.
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.
Tanzania, Uganda, and South Africa lead as the top African source markets for remittance inflows into Kenya.
The drop in remittances comes hot on the heels of a UN report which projected remittances to African countries drop by 5.4 percent this year due to loss of jobs by many migrants.
Apart from job losses, migrants are also face reduced incomes as the effects of the pandemic persist.
The Continental Migration Report 2021 by the United Nations Economic Commission for Africa projects remittances to drop to $41 billion (Sh4.5 trillion) in 2021 from $44 billion(Sh4.8 trillion) last year.
While the pandemic was expected to lead to a significant decrease in remittances to Africa in 2020, a World Bank report showed there was a slight decline than previously projected.
The bank had projected remittances to decline by 20 per cent but they dropped by an estimated 12.5 percent, defying the pandemic.
In Kenya, CBK data shows that remittance flows to the country actually increased by 10 per cent to Sh340.2 billion in 2020 from Sh307 billion in 2019.
According to the report, the costs associated with sending remittances to Africa are some of the highest in the world hampering growth.
A migrant sending $200(Sh21,900) to his/her family in Africa pays an estimated nine percent of the value of the transaction, approximately Sh2,000.
Despite the dip in remittances , CBK data shows usable foreign exchange reserves remained adequate at $9,619 million(Sh1.06trillion) as at September 16.
This represents 5.88 months of import cover and meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover.
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.
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.