Slowing inflationary pressure in advanced economies such as the US and Britain lifted the monthly flow of dollars from Kenyans living abroad to record levels, in part helping ease pressure on the shilling.
Diaspora remittances amounted to $412.41 million (about Sh65.83 billion using the average conversion rate of 159.63 units per dollar) in January, official data shows, the highest levels on record.
The Central Bank of Kenya (CBK) statistics indicate inflows from the US —which accounted for 54 percent of the total remittances — grew 8.17 percent year-on-year to $221.01 million (about Sh35.28 billion), a 25-month high.
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The cash wired home by Kenyans in the world’s largest economy during the review month was the highest in post-Russia-Ukraine war which disrupted global supply chains, sending inflation to decades-high levels.
Soaring energy, food, and rent prices due to supply disruptions that followed Russia’s invasion of Ukraine in February 2022 had pushed up living costs in the US and Europe to decades-high levels. That ate into disposable income that Kenyans in those countries tap to help families and dependents back home.
Inflation in the US rose 3.1 percent in January, slower than five percent growth in wages, freeing up income for households there.
Data shows remittances from the UK, which has in recent months also witnessed slowed price pressures, more than doubled in January compared with a year earlier.
Kenyans in Britain sent home $49.02 million (about Sh7.83 billion) in January, a 115.79 percent jump over $22.72 million (Sh3.63 billion) a year ago, lifting Europe’s second-largest economy above Saudi Arabia.
The increased remittances came in a month after schools re-opened for the new academic year. Kenyans working abroad usually take care of education costs for kin back home.
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Findings of past studies, including the CBK-commissioned Kenya Diaspora Remittances Survey Report of December 2021, have suggested that the largest share of inflows goes into supporting families at home to buy food, household goods as well as pay medical bills and school fees.
Increased dollar inflows from Kenyans abroad have partly helped ease pressure on the shilling this year by supporting the supply side of the dollar against demand by importers shipping in goods as well as companies paying expatriates and dividends to foreigners.
Diaspora remittances have since 2015 remained the largest source of foreign cash flows into Kenya ahead of tourism, foreign direct investments, and leading agricultural exports such as tea and horticulture.
“We want you to be able to send money back home for investments. The second thing is to help us open pathways to enhance our trade in goods and services,” Diaspora Affairs Principal Secretary Roselyn Njogu told an annual diaspora homecoming convention in Nairobi last December.
“We look at diaspora as a two-way valve: you allow our goods and services to go out because you are already out there and you bring in tourists and investments.”
Shem Ochuodho, global chairman of Kenya Diaspora Alliance, says incentives such as tax rebates have always said if you want milk from a cow, you first fatten it’. There’s no reason Kenyan diaspora cannot match the kind of investments we have seen in some countries like the Philippines if they are given incentives,” Dr Ochuodho said in an interview with the Business Daily last year.
