NAIROBI, Kenya- Kenya’s diaspora has sent home the highest remittances since December 2023, driven by easing inflation in the United States.
According to the Central Bank of Kenya (CBK), Kenyans living and working abroad remitted $414.3 million (Sh53.4 billion) in July 2024, a significant jump from $378.1 million (Sh49.1 billion) in June.
This increase highlights how lower inflation in the U.S. is translating into more disposable income for Kenyans abroad, allowing them to send more money back home.
For the first time since March 2021, U.S. inflation, as measured by the Consumer Price Index (CPI), dropped below three percent in July, fueling optimism that the Federal Reserve might cut interest rates in September.
This easing of the cost of living in the U.S. has had a direct impact on remittances to Kenya, with July’s figures representing the highest monthly inflows since December last year, when Kenyans abroad sent Sh54 billion back home.
The United States remains the largest source of these funds, accounting for 52 percent of the remittances received in July 2024.
Other key sources of remittances include Canada, the United Kingdom, Germany, Saudi Arabia, the United Arab Emirates, and Australia.
The cumulative inflows for the 12 months leading up to July 2024 reached $4.4 billion (Sh568 billion), marking a 12.2 pc increase from $4.1 billion (Sh529 billion) recorded during the same period in 2023.
This steady growth underscores the resilience of diaspora inflows in supporting Kenya’s current account and foreign exchange market.
The significant rise in remittances follows a brief dip in June, when Kenyans abroad held off on sending money while monitoring the developments around the Finance Bill, 2024.
The controversial bill had proposed a 16 percent Value Added Tax (VAT) on telegraphic money transfer services and foreign exchange transactions, which could have hiked transaction charges.
However, President William Ruto ultimately rejected the proposed tax after weeks of public protests, some of which turned deadly, claiming at least 50 lives and causing extensive property damage.
The CBK has continued to support retail investors in Kenya and abroad through initiatives like the CBK DhowCSD, a web platform and mobile app that makes it easier for investors to participate in government securities.
Launched last year, this platform allows investors to bid in securities auctions, view auction results, check payment details, and access portfolio statements—all from the convenience of their devices.
During the week ending August 15, 2024, the Kenya Shilling remained stable against major international and regional currencies, exchanging at Sh129.20 per U.S. dollar, slightly up from Sh129.41 the previous week.
The CBK did not elaborate on the reasons behind the shilling’s stability, but it is clear that the ongoing influx of diaspora remittances continues to play a crucial role in supporting the local currency.
Since 2017, diaspora remittances have been Kenya’s leading source of foreign exchange earnings, surpassing traditional revenue streams such as tea, coffee, and tourism.
Despite predictions from bodies like the World Bank that remittance flows to Low and Medium Income Countries (LMICs) would decline due to global inflation and low growth prospects, Kenya’s diaspora has defied the odds, consistently sending more money home.
