INFLOWS

Remittances projected to hit new high driven by Middle East

The gulf states include Saudi Arabia, United Arab Emirates, Qatar, and Bahrain, key destinations for domestic jobs.

In Summary
  • Globally, the number of Kenyan migrant workers is over four million, with a  greater percentage being skilled youth.
  • Last year, Kenyans living abroad sent home a record $3.718 billion (Sh421.6 billion)
A customer uses the WorldRemit Application/BRIAN OTIENO
A customer uses the WorldRemit Application/BRIAN OTIENO

Diaspora remittances are projected to hit a new high this year buoyed by the reopening of economies with more Kenyans tapping job opportunities abroad.

The Middle East has been identified as one of the key drivers of inflows this year, albeit lower volumes than the lead market of the US, as the number of Kenyans securing jobs in the region continues to rise.

The gulf states include Saudi Arabia, United Arab Emirates, Qatar, and Bahrain, key destinations for domestic jobs.

According to the Labour Ministry, the number of Kenyans in the Middle East has risen to above 97,000 from about 55,000 in 2019.

Globally, the number of Kenyan migrant workers is over four million, with a  greater percentage being skilled youth.

"With economic recovery underway in many major global economies, improved jobs and income prospects for migrant workers in these countries could lead to stronger remittance inflows in 2022,” said Sharon Kinyanjui, Director Europe Middle East and Africa Receive Markets, WorldRemit.

Kenya's annual diaspora inflows have hit a record high each year since 2016.

Last year, Kenyans living abroad sent home a record $3.718 billion (Sh421.6 billion), the latest Central Bank of Kenya data shows, as they supported families back at home during the festive season.

A survey by CBK showed most of the cash sent home by Kenyans living abroad goes toward supporting family members, relatives or friends at 86 per cent.

The majority of the respondents sent remittances to support recipients in the purchase of food and household goods, for offsetting medical expenses and meeting education expenses.

“Other purposes include payment of rent and household utilities, payment for the costs associated with ceremonies; clothing and farming needs,” CBK notes.

This, as a shift to technology in the remittance industry, continues to accelerate following the Covid-19 pandemic, with industry players predicting more tech-driven inflows.

The cumulative inflows in 2021 were 20.1 per cent higher compared to $3.094 billion (Sh350.9 billion) in 2020.

“We expect this momentum to continue," Kinyanjui said, “The initial Covid lockdowns dramatically slowed global migration. With travel picking up again and the Middle East remaining a popular destination for Kenyans looking for jobs and opportunities, we expect remittances from the region to remain strong and resilient."

According to Kinyanjui, technology has disrupted the cost of remittances, the speed of transactions and the customer experience.

“The shift to tech is here to stay. The affordability, fast and secure transactions and a positive experience sending and receiving money that comes with digital services is what customers are most interested in," she said.

Remittances have continued to support economies, including Kenya,  at a time when inflows from exports were low due to lockdowns .

Education remains one of the main uses of money sent back home by Kenyans in the diaspora.

 “The US remains the largest source of remittances into Kenya, accounting for 63.2 percent in 2021,” the Central Bank of Kenya notes in its weekly bulletin.

Remittance inflows in December 2021 were an all-time record of $350.6 million (Sh39.8 billion), compared to $299.6 million (Sh33.9 billion) in December 2020, a 17 per cent increase.

They were also higher by 9.5 per cent compared to the $320.1 million (Sh36.2 billion) sent home in November, in line with seasonal factors.

Earlier in October, Kenyans living and working abroad had dent home $337.4 million (Sh38.2 billion).