Kenyans Abroad Remit 354.3 Million Dollars in August

New data from the Central Bank of Kenya shows that the slowdown in the US economy has caused a decline in diaspora remittances to Kenya, resulting in a Sh1.5 billion shortfall in the first half of this year.

The total remittances from abroad fell by 0.5 per cent to Sh287.7 billion in the six months leading up to June, with remittances from the US - which make up 54 per cent of the total - decreasing by 3.8 per cent to Sh163.1 billion. This is due to the monetary policy tightening by the US Federal Reserve which is combating inflation and has caused many economists to predict a possible recession. Remittances from other regions, however, have seen growth with Europe, Asia, and Africa seeing increases of 1.7 percent, 4.9 percent, and 34.8 percent respectively.

Remittances from the UK and Saudi Arabia increased by 6.8% and 31.8% respectively, reaching a total of Sh23.9 billion and Sh26 billion. Uganda has also experienced significant growth in remittances with a 99.5% increase to Sh4 billion. However, South Africa saw a decrease in remittance inflows by 55.2% to Sh747.7 million. Despite this, diaspora remittances continue to be a crucial source of foreign exchange and the largest source of hard currency in Kenya, second to foreign direct investments.

Remittance inflows in August rose to USD354.3 million as compared to USD310.5 million during the same period last year, indicating an increase of 14.1%. The Central Bank of Kenya recognizes the importance of these remittances in supporting the exchange rate. Governor Kamau Thugge has noted the impact of the US economy on remittances, but he remains optimistic about the resilience of diaspora dollars in the future.

“The remittance inflows continue to support the current account and the foreign exchange market. About 57 per cent of remittances come from the United States. The slowdown in the US economy may be part of the story explaining why there is a flattening of the diaspora remittances,” he noted.