Diaspora Kenyans Cut Money Remitted Home by Sh2 Billion

Diaspora Kenyans Cut Money Remitted Home by Sh2 Billion

Kenyans living and working abroad reduced their remittances to their home country by Sh2 billion in September despite the easing inflationary pressure in key markets such as the US.

This marks the second consecutive month of decreased inflows, with $340.4 million (Sh50.2 billion) sent back home compared to $354.3 million (Sh52.2 billion) in August. Unfortunately, this reduction in remittances did not provide much support to the country's forex reserves, which continued to weaken. The forex reserves dropped to $6,833 million (Sh1 trillion), equivalent to about 3.67 months of import cover, from $6,872 million (Sh1.01 trillion) the previous week. Despite this, the Central Bank of Kenya remains optimistic, stating that the remittance inflows are still strong and continue to support the current account and foreign exchange market.

In September 2023, remittance inflows totalled $340.4 million (Sh50.2 billion), a 7.1 per cent increase compared to September 2022. According to the CBK's weekly update, the cumulative inflows for the 12 months leading up to September 2023 amounted to $4,142 million, a 3.5 per cent increase from the same period in 2022. In July, Kenyans set a new record by sending back home the highest-ever amount of $378.1 million (equivalent to Sh55.8 billion). The weakening of the shilling, which now stands at Sh149.58 against the US dollar, was expected to drive an increase in remittances, according to the Western Union's Global Money Transfer Index.

However, this projection has not yet materialized, with only July seeing a significant rise in inflows despite the further weakening of the Kenyan currency in subsequent months. The US remains the largest source of remittances, accounting for 57 per cent in September 2023. Recently, Saudi Arabia emerged as a major contributor to the rapid growth in remittances to Kenya. This has prompted Nairobi to engage in discussions for a bilateral agreement with Riyadh, aiming to establish a structured framework for the recruitment of professionals to work in Saudi Arabia.

In 2022, Kenyan expatriates residing and working in Saudi Arabia sent a total of $302.26 million (equivalent to Sh44.6 billion) back home. This marked a significant increase from the $185.01 million (Sh27.3 billion) remitted in 2021, despite the challenges posed by high global inflation affecting remittances from other key sources. In 2017, diaspora remittances surpassed the revenues generated from tea, coffee, and tourism, becoming Kenya's leading source of foreign exchange earnings. Experiencing a significant blow from the COVID-19 pandemic, the second-largest contributor to foreign exchange earnings saw an 80 per cent decline in sector revenues in 2020, compared to the Sh162 billion generated in 2019.

The IMF's recent finance and development report highlights the vital role played by diaspora remittances in a country's development, noting that migrant workers are consistently increasing the amount of money they send back home each year. This ongoing trend is fueled by economic shifts that continue to motivate individuals to migrate in search of better opportunities. According to an analysis by WorldRemit, remittances in Kenya are primarily used for education, healthcare, and household needs.

Comments

Kora Kanini (not verified)     Tue, 10/24/2023 @ 12:02pm

The irony of this is, Kenyans living in diaspora live a double life. We do double investments in Kenya and where we live. But noting that life is not guaranteed, our kids most likely will not live in Kenya. Our kids were born in diaspora making them citizens of said countries.
So, some of us have investments in our motherland, but the returns are good for retirement, but for generation wealth, we have to sit back and reevaluate.
I posted a comment several years back. Indians come to Kenya and don't look back. They focus on what's ahead, not where they came from.
All in all, let live life to the fullest. You only have one life to live.
My 2 cents

maxiley (not verified)     Tue, 10/24/2023 @ 08:34pm

In reply to by Kora Kanini (not verified)

@ Kora kanini,yeap."you only have one life to live". extend it as much as possibly human.
Talking of Indians, right now they are on top of the world population wise.Not quite a badge of honor,but I guess the bigger the population,the more of every thing you will have,"Human wise".Right now they are leading the world in acquiring citizenship in other countries.Mainly UK USA,and Canada.
I could be wrong,but Ithink Indians differ with africans in the sense that instead of sending alot of cash to the motherland,they get their relatives out of the motherland-generally speaking.As those whose live in USA can attest to, by the number of convenient stores and gas stations owned by Indians.
If the trend continues, I foresee these countries re-writing their immigration laws.So make hay while the sun still shines.

Mūndūmūgo (not verified)     Tue, 10/24/2023 @ 09:53pm

In reply to by Kora Kanini (not verified)

Let me explain my thinking and plan. I do invest in Kenya and have some properties there. With the strength of the $, I'm actually going to build a house on my most valuable property beginning January. A half acre of undeveloped land in that neighborhood lists for 31-36 million shillings. Depending on the type, size and quality of house, the value ranges from approximately 66 to 150 million shillings. Some go for more but rare. Rent on those homes is good as source of passive income as well. Call it my extra retirement income. On my inevitable demise, my diaspora born child will appreciate this sort of generational wealth transfer whether he keeps the property or sells it. This is in addition to assets here in the US. How many people here or there would love this situation. Mūndūmūgo nī ecirītie. What do you think?

Dickson (not verified)     Tue, 10/24/2023 @ 09:09pm

Some of those who get diaspora financial assistance are not even worth a cup of Tea; decaf for that matter! They sing problems every single day and when given some money they misuse every penny because they did not sweat earning that money! I am completed done with folks back in Kenya!

MOHANDAS (not verified)     Wed, 10/25/2023 @ 10:38am

Kenya economy is on a downward spiral which I believe is unstoppable without Austerity measures to cut back the bloated expenditures and reduce debtt that the government is squarely responsible for.
There is other measure that the government could use by improving foreign exchange earnings but the challenge apart from tea, coffee, horticulture and diaspora inflows there is pretty little left in the way of foreign cash inflows that can be spoken about in Kenya.

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