Diaspora remittances from the United States have declined by a monthly average of three percent this year, largely attributed to the rising inflation in the world’s largest economy.
Citing data from the Central Bank of Kenya (CBK), Business Daily reports that inflows from the US dropped to $183.4 million (Sh21.9 billion) in July from $221.5 million (Sh26.5 billion) in December 2021.
Analysts linked the decline in remittances from Kenyans living and working in the US to the jump in US inflation which rose unexpectedly in June to a four-decade high of 8.6% of 9.1 percent. President Biden’s administration says Russia’s invasion of Ukraine is to blame for rising prices.
“The rise in cost of living in the US has largely contributed to the drop in remittances from that source nation,” said IC Group economist Churchill Ogutu,
“Furthermore — looking from the recipient perspective — the CBK survey on diaspora remittance had listed real estate investment as a major use of the remittance flow. As such, the wait-and-see attitude in the run-up to the election coupled with runaway construction costs also waded the remittance inflow towards real estate investment.”
The United States is the biggest source of remittances to Kenya, accounting for approximately 59 percent of the total sum of money sent into the country this year.
In July, the US accounted for 58 percent of the $319.4 million (Sh38.2 billion) received from Kenyans abroad.
The cumulative diaspora inflows for the 12 months to July 2022 totaled $3,995 million (Sh478 billion) compared to $3,442 million (Sh411 billion) in the same period in 2021, an increase of 16.1 percent.