Kenya has seen a significant rise in the remittances received from their diaspora population in Uganda at a time when inflows from other top global sources are declining under inflationary pressure.
In the first five months of the year, the diaspora remittance from Uganda dollars has more than doubled when compared to the same period last year. This is despite total flows increasing by 1.81%. The majority of the money wired from Uganda came in May, which pushed Uganda to the fifth largest source of diaspora dollars globally, after the US, Saudi Arabia, the UK, and Germany.
The Kenya Diaspora Alliance believes that the strengthening of the Ugandan shilling against the Kenyan shilling is a contributing factor to the increase in remittances. On Thursday, the Kenyan shilling was worth 13.39% less than it was at the end of last year. This year, inflows of dollars from Kenyans abroad, which are the largest source of foreign exchange in front of tea exports and tourist receipts, have had a single-digit growth.
For example, between January and May, the remittances totalled almost $1.72 billion, which is only a 1.81 per cent increase from the $1.69 billion in the same period the previous year. This is a slowdown from a 16.86 per cent growth in the same period in 2020 and a 23.09 per cent increase in 2019, according to the Central Bank of Kenya (CBK) data.
The weakening growth in remittances is predominantly caused by reduced flows from Kenyans in the US, who make up almost 60 per cent of the total inflows. For instance, the inflows from the US in the first five months of the year dropped 5.04 per cent compared to the same time in the previous year, amounting to $964.25 million.
