Diaspora remittances took a hit last month as Kenyans in Europe, rest of the world sent less
CBK data shows the inflow from North America, the United States in particular, remains the primary source of these remittances followed by the rest of the world
The diaspora remittances to Kenya in January 2025 declined by nearly US$10.72 million, which translates to about Ksh 1.386 billion, in comparison to what had been reported in December 2024.
Analysis reveals that the decline in remittances from Europe and the rest of the world contributed to the decline. Statistics indicate that Kenyans in Europe remitted US$128,430.12 (Ksh 16,612,436.02) in December 2024 compared to US$113.033 million (Ksh 14,620,911.68) in January 2025.
According to the Central Bank of Kenya data, the inflow from North America, the United States in particular, remains the primary source of these remittances followed by the rest of the world.
The United States remains the largest source of remittances, contributing 51 per cent of total inflows in 2024. “The growth in remittances continues to support Kenya’s current account and the stability of the exchange rate,” CBK said in a statement during its monetary policy meeting.
The increased remittances play a significant role in bolstering the country’s foreign exchange reserves, which according to the latest data from CBK has remained above the statutory requirement of maintaining at least four months of import cover.
In January, the Central Bank of Kenya’s (CBK) foreign exchange reserves were US$9,256 million, which was enough to cover imports for 4.7 months. “This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover,” the bank confirmed.
Following the increase of diaspora remittances, Kenya now earns more foreign exchange from diaspora remittances than its major exports like coffee, tea, and horticulture individually despite poor policy on diaspora.
The growth is coming from officially recorded remittance flows to low- and middle-income countries (LMICs) moderated in 2023, reaching an estimated $656 billion, according to the World Bank’s Migration and Development Brief.
Remittance flows to Sub-Saharan Africa reached $54 billion in 2023, a slight decrease of 0.3 per cent. The global lender had projected remittances to LMICs to grow at a faster rate of 2.3 per cent in 2024, although this growth is uneven across regions.
It had pointed out that potential downside risks to the projections include weaker than expected economic growth in high-income migrant-hosting countries and volatility in oil prices and currency exchange rates.
The World Bank ranks Kenya among Africa’s top three recipients of diaspora remittances behind Nigeria and Ghana. Besides, liquidity in the money market remained adequate during the week ending January 16 supported by open-market operations.
Commercial banks’ excess reserves stood at Sh15.1 billion in relation to the 4.25 per cent cash reserves requirement (CRR).
