INFLOW

Amount sent home by Kenyans in diaspora drops in November

CBK; data shows the amount was 24.2 per cent more compared to similar period last year

In Summary
  • The United States remains the largest source of remittances into Kenya, accounting for 67.3 per cent
  • The country has recorded highest levels of diaspora remittances since last year despite Covid-19 pandemic
CBK Headquarters
CBK Headquarters
Image: FILE

Kenyans living abroad sent home $320.1 million in November, 5.1 per cent lower compared to $337.4 million in October a factor attributed to seasonal trends.

Even so, data by the Central Bank of Kenya (CBK) shows  the amount was 24.2 per cent more compared to similar period last year where $257.7 million was remitted back home.

The cumulative inflows for the 12 months to November totaled $3.67 billion  compared to $3.045 billion in the same period in 2020, a 20.4 per cent increase.

The country has recorded highest levels of diaspora remittances since last year despite Covid-19 pandemic that has been crippling global economy since late 2019. 

In October, the amount of money sent back by Kenyans abroad hit a series high, having broken the $300 million monthly rate in May after $315.8 million (Sh34 billion).

The United States remains the largest source of remittances into Kenya, accounting for 67.3 per cent in November.

Gulf states such as Saudi Arabia, United Arab Emirates, Qatar, and Bahrain have also emerged as important drivers of remittances, 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.

Diaspora remittances is now Kenya's forex earner after overtaking tea, coffee and tourism in 2017. 

Tea and coffee earnings have been shrinking in recent times due to high global supply , eroding prices.

Tea prices at the Mombasa auction have declined for a eighth  time in a row as the minimum price set by the government to address low earnings from the commodity fails to hold.

East African Tea Traders Association said prices declines to Sh246 in last week’s trading, down from Sh250 in the previous sale.

The price had rallied for two months after the introduction of the minimum price that buyers were supposed to pay for Kenya Tea Development Agency teas, peaking to a five year high of Sh256 before it started dipping again.

The tourism sector which used to be the second most forex earner was worst hit by Covid-19 with  sector revenues declining by 80 per cent in 2020 compared to 2019 when the country realized Sh162 billion.

Data from the ministry of tourism shows the tourism sector directly contributes 4.4 per cent of the Gross Domestic Product (GDP).

The sector is, however, slowly recovering with most tourism hotels recording 80 per cent booking for Christmas festivities. 

The inflow of diaspora remittances helped to cushion the shilling against major international currencies, trading 112.56 against the greenback on Friday compared to 112.86 the previous week. 

The local currency, just like others globally have lost value in past two years as global trade slowed on Covid-19.

Early this month, the shilling dropped to  a historic low of 112.83 as the demand for the greenback by importers persisted.

This, despite regular innervations by the apex bank to iron out volatilities, leading to weekly shrinking of the forex reserve.

On Friday, CBK quoted usable foreign exchange reserves at $8.737 billion  (5.34 months of import cover) compared to Sh8.73 billion the previous week. 

The banking regulator, however, downplayed the persistent drop, saying the available stock  meets its statutory requirement to endeavour to maintain at least four months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover.