Kenyans in the diaspora have for the first time sent reduced remittances in the three months in 2023.
According to data from the Central Bank of Kenya (CBK) the remittances in the three months to March fell for the first time since 2010 as inflation hit multi-decade highs in many countries, squeezing household budgets.
The remittances dropped to Sh137.4 billion in the quarter to March from Sh138.5 billion in the same period last year.
Diaspora Remittance inflows in the previous month of February totaled USD 309.2 million, compared to USD 349.4 million in January, a decrease of 11.5 per cent.
The cumulative inflows for the 12 months to February 2023 totaled USD 4,026 million compared to USD 3,840 million in February 2022, an increase of 4.8 per cent.
Data from CBK indicate that the USA remains the largest source of remittances in Kenya, accounting for 59 per cent.
Kenya is among the top three African countries in receiving remittances, with Nigeria taking first place and Zimbabwe following closely behind.
Kenyans abroad typically send money to help their families and to invest in projects like real estate, with flow from the US accounting for about 60 percent of the total remittances.
Kenya has one of top three largest diasporas in Africa. According to UN 2017 data, Kenya’s diaspora contains an estimated 501,204 people, with the International Organization for Migration (IOM) estimating that the number is much higher. Nigeria takes first place among top African countries receiving remittances, while Zimbabwe follows Kenya closely behind.
The rising cost of living in countries like the US and in Europe on the back of costly energy, food and rent has been squeezing households and putting pressure on policymakers to bring the issue under control.
According to the World Bank, remittances are projected to decline by one percent this year, due to weaker conditions in migrants’ destination countries. For instance, the cost of sending $200 to Sub-Sahara Africa, including Kenya, costs 7.8 per cent on average last year, down from 8.7 per cent the previous year.
During his 2023 Labor Day speech, President William Ruto had lauded the 2022 diaspora remittances from Kenyans abroad, which hit a record $4.027 billion in 2022, inching closer to exports which brought in $5.77 billion worth of foreign currency.
“The money we get every year from Kenyans in the diaspora is Ksh.400 billion. That is even more than what we get from our tea, coffee or horticulture exports,” said President Ruto.
Data from the Central Bank of Kenya (CBK) showed that Kenya earned more foreign exchange from diaspora remittances than each of its major exports (coffee, tea and horticulture) last year.
Tea, the country’s leading export, earned the country $1.2 billion, while horticulture brought in $901 million, chemicals ($521 million), coffee ($301 million) and petroleum products ($77 million).
The country’s leading export, earned the country $1.2 billion, while horticulture brought in $901 million, chemicals ($521 million), coffee ($301 million) and petroleum products ($77 million).