Foreign Cash Deposits in Kenyan Banks Grow By Sh60 Billion Buoyed By Diaspora Inflows

Foreign currency deposits held in local banks increased by Sh60 billion in the month of June, data from the Kenyan government shows.

Analysts attributed the huge growth of the foreign currency deposits to increased remittances by Kenyans in the diaspora as well as wealthy Kenyans taking advantage of a tax amnesty on cash and assets stashed in offshore accounts.

Kenya National Bureau of Statistics (KNBS) said the holdings rose to Sh574.7 billion in June from Sh514 billion in May — which was the first time the deposits crossed the Sh500 billion mark. The Sh574.7 billion represents a 28 per cent increase from the Sh450.6 billion in June 2017. 

The Central Bank of Kenya (CBK) said the healthy diaspora remittances was as a result of more Kenyans abroad investing their cash back home.

“Banks have introduced new products targeting the diaspora, which have been very effective…the diaspora have also responded favourably and consequently the numbers in remittances have been much higher,” said CBK Governor Patrick Njoroge during the last Monetary Policy Committee briefing at the end of July.

Diaspora inflows hit a new monthly record of Sh26.8 billion ($266.2 million) in June. Cumulatively Kenyans abroad sent home Sh138.4 billion ($1.378 billion) between January and June, 2018.

This was a 55.3 per cent growth over the same period in the previous year when they stood at Sh89.3 billion ($887.6 million).