- Kenyans in the diaspora sent home $4.19 billion in 2023 as remittance inflows to the East African country hit an all-time high.
- The high numbers signal that Kenyans living and working in the diaspora defied the inflationary pressures they still experienced to send more money back home.
- Since the height of the COVID-19 pandemic, many Kenyans in the diaspora have had to cut spending to navigate inflationary pressures and afford to send money back home.
Kenyans in the diaspora sent home $4.19 billion in 2023 as remittance inflows to the East African country hit an all-time high, boosting foreign exchange reserves and support for families in the wake of tough economic times.
According to the Central Bank of Kenya (CBK), the figures are up by four per cent compared to the $4.02 billion sent in 2022.
“The inflows were strong in December 2023 at $372.6 million compared to $355.0 million in November, an increase of 5.0 per cent,” CBK noted in its latest remittances update through the weekly bulletin.
The US remains Kenya’s largest source of diaspora remittances, accounting for 56 per cent in 2023.
The high numbers signal that Kenyans living and working in the US defied the inflationary pressures they still experienced to send more money back home.
The US consumer price index rose 3.4 per cent to close out 2023, ending a year of substantial progress on reigning high inflation and yet to ease Federal Reserve rates.
During the year, the Consumer Price Index, which measures the average price changes for commonly purchased goods and services, rose 0.3 cents in December from November, matching expectations, according to Bureau of Labor Statistics data.
Other key sources of remittances to Kenya are the African market, Europe and the Middle East, which has continued to record many Kenyan migrants seeking employment in the Arabic countries.
Read also: Remittances to Africa grow to $5.3B on strong flows to Kenya, Nigeria
Cutting on spending
Since the height of the COVID-19 pandemic, many Kenyans in the diaspora have had to cut spending to navigate inflationary pressures and afford to send money back home.
Job cuts also became imminent amid fears of recession.
A survey by World Remit noted that about 49 per cent of respondents ate out less, 46 per cent saved on day-to-day expenses, while 28 per cent had limited social gatherings to save money.
About 25 per cent of the respondents said they had opted for public transportation rather than driving to save, part of which has seen them continue to support families and friends back at home.
“Migrants’ resilience and commitment to their loved ones back home has proven to be vital especially in a period where household expenses are increasing around the world,” said Jorge Godinez Reyes, Head of the Americas, WorldRemit.
The majority (52 per cent), however, said they were now sending money to fewer people due to the tough economic times.
The survey involved 3,000 international money senders living in the USA, Australia, and the United Kingdom, aged 18 years and above.
They voluntarily responded to a 13-question survey about how the cost of living and inflation had changed behaviours regarding sending money back home.
Globally, 78 per cent of remittance senders agree that the cost of living has personally affected them, even as those back home in Kenya and other African countries battle even higher inflation.
Foreign exchange
They remain a key cushion to the country’s foreign exchange reserves, which have in recent months become under pressure as Kenya navigates a high debt obligation with a $2 billion Eurobond maturing in June this year.
As of Friday, usable foreign exchange reserves were at $6.8 billion (3.6 months of import cover.
This was below the preferred four of import cover that Kenya and other East African Community (EAC) member states endeavour to maintain.
The weakening shilling against the US dollar, exchanging at $0.0062 at the time of writing, has continued to increase the country’s external debt.
According to Kenya’s Office of the Controller of Budget, interest and debt repayment on the country’s US-denominated debt has continued to rise with the weakening shilling.
The country is expected to repay Eurobond debts of $1.96 billion in 2024, $880 million in 2027, and $978 million in 2028.
Total debt stood at $65.4 billion as of September last year, official data shows, with new loans in December into this year pushing up the figure.
Of this, $34.4 billion was external debt, while $30.4 billion were loans borrowed from the domestic market, including bonds and treasury bills.
Read also: IMF eases Kenya’s Eurobond pressure with $684 million loan
Supporting families back home
Daily expenses, healthcare, and educational support continue to be major reasons for sending money back home, according to industry trends, as those in the diaspora say they moved abroad to seek greener pastures to change the economic landscape back home.
“I had a job back home but it was not paying enough, there is nothing much I could do with the salary so I opted to try life abroad. It has made me change a lot back home,” Rehema Said, who moved to Oman in 2019, told the Exchange.
Another migrant, George Ouma, who lives and works in the US, says he has been able to educate all his siblings and plans to have them further studies abroad.
Most of the money sent home goes into education, enabling brothers and sisters to finish high school. God willing, I want them to seek opportunities in the US or Europe,” he said.
Apart from Kenya, other key recipients of remittances are Nigeria, Ghana, Zambia, and Mozambique, among others.
Costs of remittances by Kenyans in the diaspora
According to the World Bank and industry players, lowering the cost of sending money remains a key factor in driving diaspora remittances.
The global lender has cautioned that remittances would decline by one per cent last year due to weaker conditions in migrants’ destination countries.
For instance, sending $200 to Sub-Sahara Africa, including Kenya, costs about 7.8 per cent on average.
Remitting from countries in the least expensive corridors averages 3.4 per cent compared to 25.2 per cent for the costliest corridors.
This has limited the potential for the growth of remittances, which is seen as a major shaper of the socio-economic well-being of families in poor countries.
