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By:
ALFRED ONYANGO | |||||||||
| Posted:
Jan,26-2024 12:41:28
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| Kenyans living and working abroad increased the money they sent back home for the 12 months to December 2023 by Sh25.9 billion, riding on the weakening shilling as projected by Western Union. In its inaugural Global Money Transfer Index in March last year, the corporation projected an increase in remittances, fueled by the weakening shilling that has now hit the 160 mark against the US dollar. “Remittance inflows reached an all-time high of $4.19 billion (Sh670 billion) in 2023, compared to $4.03 billion (Sh644.8 billion) in 2022, an increase of 4.0 per cent,” CBK says in its weekly bulletin. Inflows for December increased by 5.0 per cent to $372.6 million (Sh59.2 billion) from $355.0 million (Sh56.4 billion) in November. It is the second month after July to record the highest amount to be sent back home by Kenyans during the year. July recorded the highest-ever amount when inflows hit $378.1 million. The increased amount of money sent home by the Kenyan diaspora did little to support the country’s forex reserves, which continued to weaken further. Forex reserves dipped to a low $6,814 million (Sh1 trillion) just about 3.6 months of import cover as of January 18. This is from $6,829 million (Sh1.08 trillion), about 3.7 months of import cover a week earlier. However, the Central Bank of Kenya is putting on a brave face despite the reduced forex reserves, which has fallen short of the statutory requirement of having at least four months of import cover for the better part of last year. It maintained that the remittance inflows remained strong and continued to support the current account and the foreign exchange market. “This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover,” it said. The US remains the largest source of remittances into Kenya, accounting for 56 per cent in 2023. In recent times, Saudi Arabia has emerged as the primary contributor to the rapid increase in remittances flowing into Kenya. It has leapfrogged the United States to become the biggest driver of growth in cash wired back home, underlining the lingering effect of elevated inflationary pressures on household earnings in the world’s largest economy. Remittances from the Middle East’s economic powerhouse accounted for nearly two-thirds of the growth in diaspora inflows for the first eight months of the year 2023, according to the latest official data. The developments have since prompted the state to initiate discussions for a bilateral agreement with Riyadh. This agreement aims to establish a structured framework for recruiting professionals to work in Saudi Arabia. In 2022, Kenyan expatriates living and working in Saudi Arabia sent home a total of $302.26 million (equivalent to Sh48 billion). This marked a substantial increase from the $185.01 million (Sh29.4 billion) remitted in 2021, despite the challenges posed by elevated global inflation affecting remittances from other key sources. In 2017, diaspora remittances became Kenya's leading source of foreign exchange earnings, surpassing the revenues generated from tea, coffee, and tourism. The tourism industry, previously the second-largest contributor to foreign exchange earnings, suffered a severe blow due to the Covid-19 pandemic, witnessing an 80 per cent decline in sector revenues in 2020. This was compared to 2019 when the country generated Sh162 billion. | |||||||||
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Source:
The Star
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