Diaspora inflows during the first three quarters of this year experienced the slowest growth in 13 years, adding more strain to the country’s supply of dollars.
Data provided by the Central Bank of Kenya reveal that diaspora remittance increased by four per cent from January to September which is the most sluggish growth rate observed since 2010. Coincidentally, the country is still grappling with its foreign exchange predicament as the local currency has depreciated by nearly 20 per cent since the beginning of the year. The two per cent growth observed in the first quarter of 2010 was a result of the global financial crisis that impacted advanced economies in the later part of the previous decade.
In the year 2009, there was a three per cent decrease in inflows, which then recovered in 2010. Kenyans abroad transferred a grand sum of $3.1 billion (equaling Sh403.8 billion) in contrast to last year’s $2.9 billion (Sh329.1 billion). This slower increase in remittances can be pinpointed to constant inflationary pressure resulting in multiple central banks around the globe raising their benchmark rates and tightening their monetary policies.
Remittances, which predominantly fund consumption, continue to be the foremost contributor to foreign exchange inflows in the nation, amounting to $4.3 billion (equivalent to Sh483 billion in the previous year). This surpasses the earnings generated from tourism (Sh268 billion), tea (Sh163 billion), and horticulture (Sh152.2 billion). Furthermore, global occurrences such as geopolitical conflicts, warfare, and the deceleration of the Chinese and Eurozone economies have significantly impacted global consumption.
