Kenyan expatriates have set a new monthly record for remittances, sending home $427.2 million (Sh55.13 billion) in August 2024.
This unprecedented inflow, as reported by the Central Bank of Kenya (CBK), represents a significant increase from the previous month’s $414.3 million (Sh53.46 billion). The surge was primarily driven by Kenyans residing in North America, with daily remittances averaging Sh1.78 billion. The cumulative eight-month remittances for 2024 have reached $2.81 billion (Sh362.4 billion), surpassing the $2.77 billion (Sh356.9 billion) received during the same period in the previous year. North American remittances, which include funds from Canada, the United States, and Mexico, saw a 9.9% increase to $250.1 million (Sh32.27 billion), constituting 58.5% of total remittances.
According to the United Nations Department of Economic and Social Affairs, the United States hosts the largest Kenyan migrant population, with 157,000 individuals, followed by the United Kingdom with 139,000. However, these figures contrast with estimates from the Pew Research Center, which suggest a lower number of around 90,000 Kenyans in America, including approximately 30,000 undocumented immigrants. While North American remittances grew, those from Europe experienced a 7.1% decline to $68.45 million (Sh8.83 billion), and inflows from other regions fell by 3.8% to $108.67 million (Sh14 billion).
Despite these regional variations, the CBK has revised its annual growth forecast for diaspora remittances to 12%, up from the initial 5% projection, following strong growth in the first four months of the year. Since 2015, diaspora remittances have become Kenya’s primary source of foreign cash inflows, overtaking traditional sectors such as tourism, foreign direct investments, and key agricultural exports like horticulture and tea. Recognizing the importance of these inflows, the Kenyan government announced plans in February to implement incentives aimed at boosting annual remittances to at least Sh1 trillion, thereby enhancing the country’s foreign exchange reserves.
The State Department for Diaspora Affairs has initiated efforts to develop a framework for increasing remittances, including a search for consultants to conduct a baseline survey. Over the past five years, remittances from Kenyans abroad have averaged $3.56 billion (Sh459.38 billion) annually, with a 4% growth in the previous year reaching $4.19 billion (Sh540.67 billion). These consistent increases in remittance inflows reflect the diaspora community’s ongoing confidence in Kenya’s economy. Remittances have played a crucial role in supporting household consumption and driving investments in key sectors such as real estate, education, and healthcare.
Additionally, they have been instrumental in bolstering the country’s foreign exchange reserves, which stood at $7.856 billion (Sh1.01 trillion) as of September 20, 2024, providing 4.1 months of import cover. An analysis by WorldRemit indicates that education, healthcare, and household needs are the primary uses of remittances in Kenya. There has also been an uptick in investments in real estate and the capital market, with the US, Canada, and the UK being the top sources of these funds.
