Diaspora (Commonwealth Union) _ In the span of twelve months concluding in December 2023, Kenyans abroad significantly boosted the funds they sent back home by Sh25.9 billion, capitalizing on the devaluation of the national currency, as predicted by Western Union.
The Central Bank of Kenya (CBK) reported an unprecedented surge in remittances, hitting $4.19 billion (Sh670 billion) in 2023, representing a 4.0% increase from the $4.03 billion (Sh644.8 billion) recorded in 2022. December witnessed a notable 5.0% rise in inflows, escalating to $372.6 million (Sh59.2 billion) from November’s figure of $355.0 million (Sh56.4 billion). Although the increased remittance amounts failed to fortify the country’s forex reserves, which continued to dwindle, reaching $6,814 million (Sh1 trillion) or approximately 3.6 months of import cover by January 18, the CBK maintained an optimistic outlook. Despite falling short of the statutory requirement of a minimum four months of import cover for a significant portion of the past year, the CBK emphasized that remittance inflows remained robust and continued to support both the current account and the foreign exchange market.
Commenting on the geographical sources, the United States retained its position as the most substantial contributor, accounting for 56% of remittances in 2023. Meanwhile, Saudi Arabia emerged as a pivotal factor propelling the growth in remittances, overtaking the US as the primary driver. Remittances from Saudi Arabia constituted nearly two-thirds of the growth in diaspora inflows during the initial eight months of 2023, underscoring the impact of heightened inflationary pressures on household earnings in the US. This trend led to bilateral discussions between Kenya and Saudi Arabia for a structured framework aimed at recruiting professionals to work in Saudi Arabia.
In summary, despite economic challenges and forex fluctuations, remittances have become a vital component of Kenya’s foreign exchange earnings, portraying resilience and serving as a crucial support mechanism for the nation’s economy.
