Diaspora inflows surge to Sh670Bn amid shilling’s slide
Kenyans living and working overseas sent home a record Kes670 billion in the 12 months ending December 2023. This marked a Kes25.9 billion increase from the Kes644.8 billion remittances recorded in a similar period in 2022.
“Remittance inflows reached an all-time high of $4.19 billion (Kes670 billion) in 2023, compared to $4.03 billion (Kes644.8 billion) in 2022, reflecting an increase of 4.0 percent,” says the Central Bank of Kenya (CBK) in its weekly bulletin.
The Central Bank added that inflows were strong in December 2023 at US$372.6 million (Kes59.2 billion) compared to US$355 million (Kes56.4 billion) in November, representing an increase of 5 percent.
Currently, the US remains the largest source of remittances into Kenya, accounting for 56 percent of the inflows recorded last year.
The increase in the amount of money wired to Kenya is partly attributable to the steady decline in the value of the Kenyan Shilling against the US dollar and other major world currencies.
Last year, the shilling lost an estimated 20 percent in value to the US dollar and has been steadily losing value this year. It is currently trading at 161.35, according to the CBK.
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To curb the decline, the Central Bank of Kenya’s Monetary Policy Committee raised the benchmark lending rate to 12.5 percent.
This move aims to control inflation and simultaneously stabilize the shilling, whose depreciation contributes to mounting price pressures and increasing debt.
The CBK notes that the country’s usable foreign exchange reserves have remained adequate at US$6,814 million, equivalent to approximately 3.6 months of import cover as of January 18.
This fulfills the CBK’s statutory requirement to strive to maintain at least 4 months of import cover, as noted by the regulator.
In 2022, over US$95 billion in remittances flowed back to Africa from the 160 million Africans residing outside the continent. Approximately US$53 billion of this sum was directed to nations in Sub-Saharan Africa, with Nigeria, Ghana, Kenya, and Zimbabwe emerging as the primary destinations.
