PROJECTION

Remittances to increase ahead of festive season–WorldRemit

The re-opening of schools is also expected to drive up the amount of money sent home.

In Summary

•Most of the monies sent home go towards education, healthcare, and household needs, mainly over the festive season.

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

WorldRemit founder, Dr. Ismail Ahmed/COURTESY
WorldRemit founder, Dr. Ismail Ahmed/COURTESY

Kenyans living and working abroad are projected to send home more money as schools reopen and the approaching December festive season.

This is after a slight drop in the month of August when diaspora remittances to the country shrunk by 7.1 per cent, as migrants struggled with the effects of Covid-19 pandemic which has hit economies across the world.

Central Bank of Kenya data shows Kenyans in the diaspora sent home $312million (Sh34.4billion) in August, down from $336.7 million (Sh37.1billion) sent in July.

Despite the monthly drop, this was a 14.2 per cent increase when compared to August 2020 when Kenyans abroad sent home $274.1million (Sh30.2billion).

The cumulative inflows for the 12 months to August 2021 totaled $3,481 million (Sh383.6billion) compared to $2,921 million (321.8billion) in the same period in 2020, a 19.2 percent increase.

According to the global payments firm–WorldRemit, most of the monies expected to be sent home will go towards education, healthcare, and household needs, mainly over the festive season.

The US remains the biggest source, WorldRemit notes.

“We expect to see high transaction volumes during the back-to-school seasons with the US remaining a key source of inflows,” said Sharon Kinyanjui, WorldRemit's Director for Europe Middle East and Africa Receive Markets.

According to the global payments firm, the emergence of digital payments and concepts such as mobile wallets has brought more people into the financial system and greatly contributed to the steady increase in remittances inflows over the past decade.

Firms that have championed a digital-first model have benefited from this trend.

“We continue to grow in Kenya and across the region in part thanks to our digital payout channels. Although users can still pick cash at selected locations, more of them are opting for mobile and bank payout option,” said Kinyanjui.

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

Last year, it lowered transaction fees for international transfers in over 450 of its larger corridors in Africa, allowing customers to send more to family and friends via the mobile app and website.

This price drop represented the largest pricing reduction in terms of the number of corridors for the business.

Apart from the US, other key market sources of remittances to Kenya are 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, with an estimated three million Kenyans living abroad.