KENYA – Kenyans in diaspora sent home more than US$3.1 billion last year, according to Central Bank of Kenya (CBK) data, a significant increase from the US$2.8 billion recorded in 2019.
The month of December last year saw the highest remittance from the diaspora of US$25.9 million, largely attributed to supporting festivities and preparations for re-opening of schools.
“This remarkable growth of remittances has been supported by financial innovations that provided Kenyans in the diaspora more convenient channels for their transactions,” read a statement from CBK.
It is only in April and May 2020 that remittances dipped but since then, they have staged a remarkable recovery as diaspora Kenyans kept the giving spirit alive.
Nigeria remains the largest recipient of remittances in sub-Saharan Africa and is the sixth-largest beneficiary among low- to middle-income countries, with an estimated $23.8 billion received in 2019.
This was an increase of more than half a billion dollars compared to 2018.
Ghana and Kenya were ranked a distant second and third in the region, with $3.5 billion and $2.8 billion received up to September 2019.
The release of the official figures comes after CBK mooted a plan to introduce a Diaspora Remittances Survey in partnership with Kenya National Bureau of Statistics, the Ministry of Foreign Affairs, and other stakeholders.
“Nigeria remains the largest recipient of remittances in sub-Saharan Africa and is the sixth-largest beneficiary among low- to middle-income countries, with an estimated $23.8 billion received in 2019”
The survey, which will be conducted in February and March, aims at collecting valuable information on remittance inflows to Kenya, the efficiency and cost of alternative remittance channels.
It will also help in informing Kenyans in the diaspora on the investment opportunities in the country and the usage of remittances received.
Despite the increased foreign remittance, the Kenyan shilling has continued to weaken under the blows of Covid-19.
The country’s foreign exchange reserves (forex) rose by US$3.4 million in the first two weeks of December, but this was not enough to shield the shilling, which exchanged at average 110.6 to the dollar.
The weak currency has raised the cost of Kenya’s external loans, a big chunk of which is denominated in dollars.
Last month, Treasury Cabinet Secretary Ukur Yatani said there was need for the country to hedge against exchange rate risks to mitigate the high cost of servicing dollar-denominated debts.
“To mitigate against currency fluctuations, the currency mix is usually preferred,” Yatani told the Kenya National Assembly Finance Committee.
Close to 66% of Kenya’s external loans are denominated in dollars.
“We need to have a strategy in our medium-term debt plan, that we have alternatives, and we are aggressively pursuing euro-denominated loans,” Yatani said.
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