•Industry players among them World Remit project strong second half of the year.
•A survey by the firm indicates a section of the diaspora community has had to take up side hustles, adjust lifestyles to be able to sustain sending money back home.
Image: FILE
Kenyans abroad defied the tough economic times to send more money in May, official data shows, giving families and friends back at home the much needed support.
Remittance inflows in May totalled $352.1 million (Sh48.9 billion), Central Bank of Kenya latest data indicates, compared to $320 million (Sh44.4 billion) in April this year, an increase of about 10 per cent.
This means Kenyans in the diaspora sent Sh4.5 billion more last month after a reduction in April, which had dropped by about Sh5.2 billion compared to the Sh49.6 billion ($357 million) sent in March.
The cumulative inflows for the 12 months to May totaled $3.99 billion (555.3 billion), almost similar to figures recorded in the same period in 2022, albeit an increase of 0.1 percent.
“The US remains the largest source of remittances to Kenya, accounting for 54 percent in May 2023,” CBK said in its weekly bulletin, released on Friday.
The remittance inflows continue to support the current account and the foreign exchange market, the regulator said, boosting the forex reserves which hit a 10-year low in March when they fell to $6.49 billion.
This was about Sh899.5 billion at then based on the shilling to dollar exchange rate, which has weakened further to put the figure at $901.7 billion, with Kenya falling below the preferred four months of import cover.
Inflows, including loan disbursements have however boosted reserved which closed Friday at $7.5 billion (Sh1.036 trillion).
“The usable foreign exchange reserves remained adequate at USD 7,459 million (4.11 months of import cover) as at June 15. This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover,” CBK said.
Since the Covid-19 pandemic period, Kenyans abroad who have also been grappling with job losses, high inflation and reduced income have had to find ways and means to sustain remittances to their loved ones back at home.
A survey by global payment firms–WorldRemit indicates more than half (54 per cent) of remittance senders have taken up a side hustle since the global Covid-19 pandemic; almost one-fifth did so to continue to be able to support friends and family back home.
Dubbed the Cost of Living Index, the survey sought to understand how the worsening inflation crisis has affected the lives of international money senders around the world.
The survey found that 82 per cent of remittance senders, including Kenyan migrants who are key remittance senders in the US, Australia, and UK markets, agreed that the cost of living for the people to who they send money to has risen since the start of the year.
Highlighting the impact of inflation on people around the world, almost half (45%) noted they now only send money to immediate family, rather than friends and distant relatives.
One in nine people worldwide relies on money sent from friends and relatives who have migrated abroad for work.
With several factors contributing to increased financial pressure, new data showed that 72 per cent of respondents in the US, 41 per cent in Australia, and 44 per cent in the UK have taken up a side hustle.
Education, healthcare and household needs are the main uses of remittances in Kenya, an analysis by the firm indicates.
The high cost of education is expected to further push the cost of living for most families in Kenya.
"Migrants’ resilience and commitment to their loved ones back home has proven to be vital especially in a period where household expenses are increasing around the world,” World Remit notes.
According to WorldRemit, families paid more than 1.75 times their monthly earnings on school supplies during the recent back to school period.
Families in Morocco, Cameroon, Ghana, Guatemala and Kenya are all projected to spend more than the average monthly income on education.
In a separate study, WorldRemit, which reaches over 5,000 money transfer corridors, including emerging markets with high barriers to entry, found out that Kenyans in the diaspora have had to cut on their spending to afford sending money back home.
About 49 per cent of respondents reported that they eat out less, 46 per cent save on day-to-day expenses, while 28 per cent have limited social gatherings to save money.
About 25 per cent of the respondents said they have opted for public transportation rather than driving to save, part of which has seen them continue to support families and friends back at home.
For families and friends, mobile money is the biggest channel of receiving cash in Kenya, particularly Mpesa.
"There is also a huge traffic on bank accounts. The shift towards digital platforms will continue shaping the industry as the customer of today equally demands faster and convenient ways of sending and receiving money,” WorldRemit management notes.
The firm has committed to continue establishing digital connectivity into geographies that had previously been underserved.
World Bank has been calling for reduced costs in sending money which it says remains a key factor in driving diaspora remittances this year.
The cost of sending $200 for instance to Sub-Sahara Africa, including Kenya, costs 7.8 per cent on average last year, down from 8.7 per cent the previous year.
Remitting from countries in the least expensive corridors is on average 3.4 per cent compared to 25.2 per cent for the costliest corridors.
“Remittances in 2023 are projected to soften to 3.9 per cent growth as adverse conditions in the global environment and regional source countries persist,” World Bank notes.