Official data from the CBK reveal that in 2022 Kenyans working and living abroad sent home a record Sh498.8 billion, 8.34 percent more than in the previous year, Sh38.39 billion more than the Sh460.41 billion sent in 2021.
The record high remittances confounded earlier gloomy projections that forecast the inflow of money into the country would fall as a result of rising global prices (inflation in the US reached 9.1 percent in June, a forty-year high) that would reduce migrants’ real incomes.
The significance of the Kenyan Diaspora to the country’s economy is not often recognized but remittances from Kenyans living abroad make up over 3.4 percent of the Gross Domestic Product (GDP).
Diaspora remittances: Kenyans abroad cut back to help families at home
Kenyans overseas also cut back on personal expenditure in order to send money home. A study by World Remit, a digital payments company (reported in The Star) showed that Kenyans living abroad cut their spending. The survey carried out in June found that 49 percent of respondents said that they ate out less than before, cut back on day-to-day expenses (46 percent) and limited social gatherings (28 percent) to save money.
The better-than-predicted figures could also be as a result of economies opening up after the Covid-19 pandemic.
Kenya’s current account and foreign currency reserves
Over 535,000 Kenyans live overseas, the majority being the 156,000-plus who live in the USA, closely followed by over 139,000 residing in the United Kingdom.
Unsurprisingly remittances from the USA amount to over half of all contributions (55.5 percent).
The funds coming from abroad helped bolster Kenya’s current account and foreign currency reserves which had been under pressure for several months.
Important source of household incomes
It is not just Kenya’s macro-economy that remittances from the Diaspora support, they are also an important source of household income for many people.
Word Bank studies suggest that money sent by expat Kenyans helps to alleviate poverty, improve nutritional intake, and are linked to increased birth weight and later school attendance rates from poorer households.