•Digitization continues to be a key driver for growth of remittance services, the global firm notes, with major developments being registered since the onset of the pandemic.
•Education and health remain the leading uses and purposes of sending money back home by Kenyans living abroad, with the US the main market source.
This week’s back-to-school is expected to boost diaspora remittances to Kenya, global payments firm–WorldRemit has noted, as Kenyans living abroad move to support families back at home.
This is after a slowdown in May when inflows dropped by about 4.4 per cent, as inflation took a toll on households in different economies, with Kenya recording the highest in two-year, at 7.9 per cent.
During the month, Kenyans living and working abroad send back home Sh39.96 billion, Central Bank of Kenya data shows.
In March, inflows hit a record monthly high of $363.6 million (Sh42.2 billion).
This was up from $321.5 million (Sh37.3 billion) sent in February, with the strong dollar against the shilling giving receivers more cash back at home.
The rush to pay schools fees is expected to lift inflows this week with a monthly projection of above 40 billion.
“Before the March rebound, remittances were down five per cent in February compared with January. As schools re-open, we foresee more inflows as family and friends in the diaspora continue to support those back at home,” World Remit management said.
Digitization continues to be a key driver for growth of remittance services, the global firm notes, with major developments being registered since the onset of the pandemic.
“Digital services are proving to be more affordable, secure and convenient for both senders and receivers. Meanwhile, innovation and customer service remains a major differentiator for service providers,” management said.
A recent survey by the firm indicates education and health remain the leading uses and purposes of sending money back home by Kenyans living abroad, with the US the main market source.
CBK’s data on the other hand shows 20 percent of diaspora remittance is received by mothers, compared to 10 per cent for fathers.
Despite economies battling recession fears, remittances are expected to remain resilient with the US accounting for more than 57 per cent of inflows.
Financial Risk Analyst Mihr Thakar notes: “The bulk of data out of the US is so far positive. A precipitous decline in remittances can be considered remotely possible, though not probable, in Global Financial Crisis (GFC)-like conditions.”
Gulf states such as Saudi Arabia, United Arab Emirates, Qatar, and Bahrain have also emerged as important destinations as more Kenyans continue to look for opportunities abroad.
CBK data ndicates that the leading source in this region is Saudi, followed by Qatar and UAE.
The World Bank has projected that remittance flows to low- and middle-income countries will increase by 4.2 percent this year to reach $630 billion (Sh74.2 trillion).
The projection is an increase from a previous $565 billion (Sh66.5 trillion) announced in the first quarter of this year.
This follows an almost record recovery of 8.6 percent in 2021, according to the World Bank’s latest migration and development brief, with Kenya being among the biggest recipients in Africa.
Remittances to Ukraine, which is the largest recipient in Europe and Central Asia, are expected to rise by over 20 percent in 2022.
However, remittance flows to many Central Asian countries, for which the main source is Russia, will likely fall dramatically, World Bank notes.
These declines, combined with rising food, fertilizer, and oil prices, are likely to increase risks to food security and exacerbate poverty in many of these countries.
“The Russian invasion of Ukraine has triggered large-scale humanitarian, migration and refugee crises and risks for a global economy that is still dealing with the impact of the Covid pandemic,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.
According to Rutkowski, boosting social protection programs to protect the most vulnerable is a key priority to protect people from the threats of food insecurity and rising poverty.