Diaspora Remittances Continue on a Downward Trend

Remittance from Kenyans abroad has been on a trailing decline for the past three months, crushing the country's foreign exchange inflows. 

According to Central Bank of Kenya (CBK) reports, remittance declined by 9.8 percent to Sh44.1 billion ($320.3 million) from Sh48.8 billion ($355.04 million) in April 2021. April's decline in diaspora inflows is the largest in 2023. Speaking of the decline, CBK  reports that the registered remittance helps in supporting the balance of payment and foreign exchange. 

It is the first time in more than a decade that the money from Kenyans abroad recorded first-quarter drop, a result of the biting inflation that hurts the disposable income of Kenyans abroad. Remittances in the quarter to March had dropped to Sh139.76 billion ($1.016 billion) from Sh140.86 billion ($1.024 billion) in March 2022.  

Price hikes in food, energy and rent have raised the cost of living in the US and Europe, diminishing the value of funds Kenyans abroad remit back home. Diaspora remittances are expected to continue on a downslide due to the global economic slowdown. 

“This signals that the cost of living in the source countries is putting pressure on remittances. Individuals for instance might be forced to put aside more income to meet rising expenses, reducing the pool of funds available to be sent back home as remittances,” said Genghis Capital research analyst Ronny Chokaa.