Diaspora remittance flows to Kenya increased by 10 per cent, from US$2,796 million in 2019 to US$3,095 million in 2020, and the Central Bank says it expects another ‘record year”. CBK projects that remittances will rise to about $3.4 billion this year, from $3.09 billion in 2020.
Remittances were also strong at $337.4 million in October recording a 20.1 per cent increase between the period January-October 2021 compared to a similar period in 2020, and the banking sector remained “stable and resilient, with strong liquidity and capital adequacy ratios”.
However, cost remains a challenge for the diaspora community and reducing it will be top on the agenda of the Central Bank after the release of the survey on remittances findings.
For Kenyans, it costs them an average of KSh2.4 billion per month when sending money home using banks compared to digital channels.
Dr Patrick Njoroge says the cost of remittances to Kenya is averaging about seven per cent, which is slightly below the average of eight per cent for sub-Saharan Africa but well above the three per cent target.
“The issue of cost is a big concern, not just for Kenya but around the world, especially those countries in the emerging markets which are recipients of a large amount of remittances,” said CBK governor Patrick Njoroge on Tuesday.
“In Kenya, it has come down to about seven per cent but it’s still varied. As part of Sustainable Development Goals, the expectation is to bring down the cost to around three per cent by 2030.”
Sub-Saharan Africa Most Expensive Region to Send Diaspora Remittance – World Bank
On the CBK survey on remittances, Dr Njoroge discloses that it will help them to understand what is happening within the sector.
The survey aims to collect valuable information on remittance inflows to Kenya to help guide policy, with the objective of boosting the role of remittances in supporting the economy and livelihoods.
The vital information includes the efficiency and cost of alternative remittance channels; the difficulties encountered in remitting cash or non-cash transfers; the availability of information to Kenyans in the diaspora about investment opportunities in Kenya; and the usage of remittances received.
“It will start the conversation on remittances and how to strengthen them, not just the volumes, but also in terms of cost, speed and security. We do have good ideas in terms of lowering the costs,” said Dr Njoroge.
Diaspora remittances are part of Kenya’s largest foreign exchange earner, largely contributing to the country’s forex reserves aimed at stabilising the shilling.
