Remittance flows to low- and middle-income countries moderated in 2023, reaching an estimated $656 billion (Sh84.9 trillion), World Bank’s latest Migration and Development Brief now indicates.
This is after a period of strong growth during 2021-2022, as the diaspora community strongly supported loved ones back at home in the wake of tough economic times, characterised by high inflation in most countries.
The modest 0.7 per cent growth rate reflects large variances in regional growth, but remittances remained a crucial source of external finance for developing countries in 2023, according to World Bank.
The inflows continue to bolster the current accounts of several countries grappling with food insecurity and debt issues.
In 2023, remittances surpassed foreign direct investment (FDI) and official development assistance (ODA).
Remittance flows to Sub-Saharan Africa reached $54 billion (Sh 6.98 trillion) in 2023, a slight decrease of 0.3 per cent.
Remittances supported the current accounts of several African countries that were dealing with food insecurity, drought, supply chain disruptions, floods, and debt-servicing difficulties.
Countries heavily dependent on remittances include the Gambia, Lesotho, Comoros, Liberia, and Cabo Verde, according to World Bank.
Kenya's Economic Survey 2024 however indicates the country's remittance inflows totaled Sh990.1 billion in 2023, an increase of 27.9 per cent from Sh774.3 billion in 2022,
According to the Kenya National Bureau of Statistics (KNBS) data,the US continued to lead as the top source for remittances to Kenya, as the country’s inflation started to ease compared to the previous year, as fed rate hikes started to pay-off.
The overall inflows to Sub-Sahara Africa are however expected to grow by 1.5 per cent in 2024, World Bank notes in its report, even as costs of sending money to the region remain high compared to other regions.
Sending $200 to the region cost an average of 7.9 per cent, almost unchanged from a year before.
Overall remittances to low- and middle-income countries, including those outside Africa, are expected to grow at a faster rate of 2.3 per cent in 2024, although this growth will be uneven across regions.
Potential downside risks to these projections include weaker than expected economic growth in high-income migrant-hosting countries and volatility in oil prices and currency exchange rates.
“Migration and resulting remittances are essential drivers of economic and human development,” said Iffath Sharif, Global Director of the Social Protection and Jobs Global Practice at the World Bank.
“Many countries are interested in managed migration in the face of global demographic imbalances and labor deficits on the one hand, and high levels of unemployment and skill gaps on the other. We are working on partnerships between countries sending and receiving migrants to facilitate training, especially for youth, to get the skills needed for better jobs and income at home and in destination countries.”
With remittances growing in importance, accurate data collection is essential to support the UN Sustainable Development Goals on reducing costs and increasing volume, experts says.