INFLOWS

August back to school to boost diaspora remittances – WorldRemit

Family and friends living abroad seen to maintain their support to those back at home.

In Summary

•This is mainly on school fees and the rising inflation.

•The political environment is also influencing inflows, global payment firm-World Remit notes.

A cashier at a Nairobi forex bureau counts dollars and shillings/
A cashier at a Nairobi forex bureau counts dollars and shillings/
Image: FREDRICK OMONDI

 The back-to-school rush is expected to have a major impact on diaspora remittances this month, global payment firm-WorldRemit has projected.

This is after a dip in June.

Family and friends living and working abroad are seen to maintain their  support to those back at home.

This is mainly on school fees and the rising inflation.

The political environment is also influencing inflows, global payment firm-World Remit notes.

The country’s inflation hit a five-year high of 8.3 per cent at the end of July, just days to the 2022 general elections.

This mainly on rising food prices.

It is expected inflows will increase after a 3.2 per cent drop to $326.1 million (Sh38.6 billion) in June, compared to Sh39.96 billion sent in May.

Average monthly remittances are expected to go above the Sh40 billion mark.

Education and health remain the leading uses and purposes of sending money back home by Kenyans living abroad,  according to a survey by World Remit, with the US the main market source.

"Historically, back to school has always boosted diaspora remittances," management said.

CBK’s data 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 said: “The bulk of data out of the US is so far positive.”

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 indicates 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.

Digitization continues to be a key driver for growth of remittance services, WordRemit says, with major developments being registered since the onset of the Covid-19 pandemic.

“Digital services continue 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.

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. 

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