The landscape of diaspora remittances to Kenya has experienced a significant shift in the first half of 2024 with Australia emerging as the fastest-growing source, surpassing Saudi Arabia.
Official data reveals that Kenyans living abroad transferred $2.38 billion during this period, marking a substantial increase of nearly 17% compared to the previous year. This growth rate is the most robust since 2021, occurring against a backdrop of easing inflationary pressures in developed economies. Australia’s contribution to remittance flows rebounded dramatically, growing by an impressive 85.94% to reach $76.31 million. This surge follows a notable decline in the previous year. Germany, which recently established a labour migration agreement with Kenya, demonstrated the second-highest growth among the top five remittance sources.
Funds sent by Kenyans in Germany increased by 40.93% to $103.11 million. These two nations have outpaced Saudi Arabia which has traditionally been a rapidly growing source of remittances to Kenya, particularly from domestic and semi-skilled laborers. While Saudi Arabia remains the second-largest source overall, its growth rate moderated to 9.95%, with total remittances of $202.23 million during the six months. The United States continues to dominate as the primary source of diaspora flows to Kenya, accounting for 52.58% of total remittances which amounts to $1.25 billion. However, this represents a decrease from its 57% share a year ago.
The United Kingdom also saw growth in remittances with Kenyans there sending home $183.44 million, an increase of 8.34% from the previous year. The growth in remittances aligns with President William Ruto’s job creation strategy which emphasizes expanding employment opportunities for Kenyans abroad. Since taking office in September 2022, President Ruto has committed to negotiating bilateral labour agreements with developed economies to create job prospects for Kenya’s growing skilled and semi-skilled youth population. On a global scale, remittance flows have demonstrated resilience despite economic challenges.
The World Bank reports that remittances to low- and middle-income countries (LMICs) reached an estimated $656 billion in 2023, with a projected growth rate of 2.3% for 2024. Remittances have surpassed both foreign direct investment and official development assistance as the largest source of external finance for LMICs since 2015. The top five recipient countries for remittances globally in 2023 were India, Mexico, China, the Philippines, and Pakistan. While the global average cost of sending $200 increased slightly to 6.4% in the fourth quarter of 2023, digital remittances offered a more cost-effective option at 5%, compared to 7% for non-digital methods.
