Saudi Arabia Overtakes UK in Kenyan Remittance Rankings – CBK

The landscape of Kenyan diaspora remittances is undergoing a significant transformation, with the Kingdom of Saudi Arabia emerging as a major contributor, challenging the United Kingdom’s traditional position.

However, both nations’ contributions pale in comparison to the substantial remittances flowing from the United States of America. In July 2024, remittances from the USA reached an impressive USD 216.6 million, far surpassing the UK’s USD 30.2 million and Saudi Arabia’s USD 37.4 million. Central Bank of Kenya data for the first seven months of the year reveal a notable shift in remittance patterns. While the UK maintained its lead over Saudi Arabia in the initial two months, subsequent data paints a different picture.

By July, government reports indicated that 310,266 Kenyans were employed in Saudi Arabia, establishing it as the primary destination for Kenyan workers in the Gulf region. This trend represents a marked change from just five years ago when in 2019, remittances from the UK stood at USD 20.6 million while Saudi Arabia contributed a mere USD 3.3 million. This transformation reflects the evolving global migration landscape where stricter European migration policies have coincided with increasing labour demands in Gulf nations, making the latter more attractive to Kenyan workers. The overall remittance inflows have shown robust growth.

July 2024 saw inflows of USD 414.3 million, a 9.6 per cent increase from USD 378.1 million in July 2023. The cumulative inflows for the 12 months leading to July 2024 remained stable at USD 4,572 million, up 12.2 per cent from USD 4,076 million in the corresponding period of 2023. The Central Bank of Kenya emphasizes the crucial role of these remittances in supporting the country’s current account and foreign exchange market, with the United States maintaining its position as the primary source, accounting for 52 per cent of inflows in July 2024. Diplomatic efforts have been made to strengthen ties between Kenya and Saudi Arabia, as evidenced by the first Joint Commission for Cooperation held in Riyadh in 2022. This meeting focused on key areas such as labour and consular affairs, ICT, transport, and development.

However, challenges persist, including allegations of indentured servitude and a concerning number of deaths among Kenyan workers in the Gulf region. Prime Cabinet Secretary and Minister for Foreign Affairs Musalia Mudavadi recently reported to the Senate that 316 Kenyan deaths had been recorded in the Gulf, with over half occurring in Saudi Arabia. In 2023, remittances reached a record high of USD 4.19 billion, marking a 4.0 per cent increase from the previous year. These inflows have become Kenya’s leading source of foreign exchange, surpassing traditional sectors like tourism, tea, and horticulture.

Recognizing this significance, the Kenyan government is working to establish frameworks that facilitate investment by Kenyans abroad, encouraging the diaspora to contribute to new business opportunities and technology transfer from their host countries. Despite the positive impact of remittances, high transaction costs remain a significant challenge. The World Bank has noted that the expense of sending money to sub-Saharan Africa is among the highest globally. Efforts to reduce these costs are crucial to maximizing the benefits of remittances for both senders and recipients.