•The renewed appetite to send money back home has been partly fueled by the weakening shilling that has seen diaspora look to capitalise on.
•Western Union in its inaugural Global Money Transfer Index had projected that the weakening shilling will be a key driver in boosting inflows.
Kenyans working and living abroad sent home a record $378.1 million (Sh54.6 billion) in July mainly to cushion the recipients from the tough times back home.
This is an increase of 18.4 percent from the $319.4 million (Sh46.1 billion) posted in July 2022, and is the second month in a row that Kenya posted an increase in foreign inflows.
The increased remittances has been partly fuelled by the weakening shilling that has seen those in the diaspora capitalise on this.
The rush to take advantage of a strong dollar by Kenyans in the diaspora is therefore boosting the purchasing power of their local beneficiaries amid the slump in the shilling, in turn triggering a remittance boom.
The inflation concerns in major economies have also continued to ease, relieving pressure on expenditure by Kenyans abroad.
In the 12 months to July cumulative inflows recorded a two percent increase to $4,076 million (Sh588.4 billion) compared to $3,995 million(Sh576.7 billion) in the similar period in 2022.
“The strong remittances inflows continue to support the current account and the stability of the exchange rate. The US remains the largest source of remittances into Kenya, accounting for 55 percent in July 2023,” said Central Bank of Kenya.
Western Union in its inaugural Global Money Transfer Index had projected that the weakening shilling will be a key driver in boosting inflows.
In recent months the shilling has depreciated against major currencies trading at an official rate of Sh144.35 against the dollar as at Monday morning. However in the open market the Shilling is now trading at just above Sh150 to the dollar.
Economic challenges such as higher cost of living and rising financial needs to meet educational costs among the recipients is driving more people back home to relatives abroad for more money.
While family support has been identified as the main purpose for remittances, consumers say transfers also play a strong role in future financial planning.
Western Union says many Kenyans in the diaspora are increasingly keeping a sharp eye on how their local currency is performing back home and looking to maximise on the opportunity.
The growth in inflows comes even as the global economic outlook remains uncertain, reflecting continued concerns about financial sector stability in the advanced economies.
WorldRemit in a study noted that while inflation in the key source of US has been a major concern, remittances are nevertheless expected to remain stable, as Kenyans living in the diaspora continue to make sacrifices to support loved ones back at home.
The record remittances indicate how Kenyans in the diaspora are defying global economic headwinds to help their families survive a ballooning cost of living.