NAIROBI, Kenya- Kenyans working overseas are breaking financial records, with remittances hitting an all-time high of $4.94 billion (Sh637.3 billion) in 2024.
This surge not only surpasses the Central Bank of Kenya’s (CBK) initial forecast of Sh600 billion but also underscores the crucial role diaspora inflows play in Kenya’s economy.
The CBK’s latest data reveals an 18pc jump from the $4.19 billion (Sh540.5 billion) recorded in 2023, marking a historic milestone.
December 2024 alone saw remittances peak at $445.4 million (Sh57.5 billion), a 5.2pc increase from November’s $423.2 million (Sh54.5 billion).
The United States remains the top source, contributing 51pc of total inflows.
These funds have been a lifeline for Kenya’s foreign exchange reserves, which stood at $9.143 billion (Sh1.184 trillion) as of January 16, 2025—equivalent to 4.7 months of import cover.
CBK noted that the inflows have helped stabilize the exchange rate while maintaining the statutory minimum of four months’ import cover.
This financial cushion highlights the diaspora’s growing role in supporting Kenya’s economic resilience.
Diaspora remittances now surpass Kenya’s flagship exports, including coffee, tea, and horticulture, in foreign exchange earnings.
Despite criticisms of an underwhelming diaspora policy, remittances have become the country’s most dependable source of foreign currency.
Globally, the World Bank reported a slowdown in remittance flows to low- and middle-income countries (LMICs), which reached $656 billion in 2023.
Sub-Saharan Africa experienced a marginal decline of 0.3pc, with Kenya ranking among the top three African recipients, trailing only Nigeria and Ghana.
While the World Bank projected modest growth in 2024, risks such as fluctuating oil prices and economic challenges in high-income host countries could impact future remittance flows.
Kenya’s money markets remained stable during the week ending January 16, bolstered by open-market operations.
Commercial banks reported excess reserves of Sh15.1 billion, while interbank rates averaged 11.33pc, up from 11.12pc the previous week.
On the Treasury front, auctions for 91-day, 182-day, and 364-day bills saw shrinking interest rates, averaging 9.56pc, 10pc, and 11.3pc, respectively.
These declines are stark compared to mid-2024 highs of 15.9pc and 16.7pc.
Meanwhile, the Treasury bond market saw impressive performance, with the January 15 auction of reopened 15-year and 25-year fixed-rate bonds receiving bids totaling Sh59 billion against an advertised Sh30 billion—a performance rate of 196.7pc.
As remittances outshine traditional exports, Kenya’s diaspora has become a cornerstone of the nation’s economic stability.