Household earnings in the United States have been affected by high inflation, leading to a shift in the dynamics of remittances from Kenyans living and working abroad.
Unpredictably, Kenyans in Saudi Arabia are now the standard setters for the growth of the cash sent back home, overtaking those residing in the United States. Almost 66% of the rise in diaspora funding from January to August can be attributed to the Middle Eastern region. This surge from Saudi Arabia occurred during a period when total inflows from Kenyans abroad experienced their slowest growth since 2010. Although the US remains the dominant source of remittances, its contribution saw a slight decline.
In total, diaspora inflows grew by 3.43 per cent, amounting to approximately $91.79 million (equivalent to Sh13.61 billion). These figures reflect the impact of rising living costs, particularly in energy, food, and rent prices, which have significantly reduced disposable income for households in the US. In the eight months leading up to August, Kenyans living in the Middle East’s largest economy increased their remittances by 30.28 per cent, sending a total of $245.95 million back home. The data reveals that Saudi Arabia, now the second largest source of remittances, contributed to 62.27 per cent of the overall growth in funds sent back to Kenya.
In the meantime, a majority of international remittances amounting to 56.18% came from the United States. However, recent figures show a marginal decline of 0.72% resulting in a remittance total of $1.55 billion. This downturn is attributed to rising inflation in the US, which reached 3.7 per cent in August. Nevertheless, diaspora earnings are still being recognized as Kenya’s primary source of foreign revenue and outperforms contributions from tourism, agriculture, and foreign direct investments.
In December 2021, a study authorized by the CBK discovered that most remittances flow towards supporting families in purchasing essential items such as food. Shem Ochuodho, the global chairman of Kenya Diaspora Alliance, implies that providing financial enticements such as tax rebates to Kenyan citizens residing outside the country could help inspire them to channel resources straight to their homeland. In response to concerns about the welfare of migrant domestic workers in the Middle East, Kenyan authorities have indicated plans to implement stricter registration rules for recruitment agencies.
Many Kenyan workers in Saudi Arabia have faced hardships after leaving their country in search of employment opportunities. It is estimated that around 200,000 Kenyans, with 60 per cent being professionals in sectors like healthcare, ICT, and construction, have found work in Saudi Arabia. Currently, these workers are typically connected to employers through agencies operating under the “kafala” system, which is used to monitor migrant workers in the Gulf region, particularly in domestic and construction sectors.
In the Gulf, the legal position of foreign workers in these industries is tied to their employers, preventing them from switching jobs or exiting the country without their bosses’ consent. This arrangement has allegedly enabled numerous instances of mistreatment by employers.
