Kenya Received $3,7 Mn in Remittances in 2021; US Biggest Source of Funding

Diaspora remittances are part of Kenya’s largest foreign exchange earner, largely contributing to the country’s forex reserves aimed at stabilising the shilling.

Kenya, East Africa’s largest recipient of remittances, received USD 3,718 million (Ksh.421.6 billion) in 2021 with the United States being the biggest source, accounting for over 63.2 per cent of these funds, according to the Central Bank.  

“The cumulative inflows in 2021 were a record of USD 3,718 million from USD 3,094 million in 2020, a 20.2 per cent increase,” the Central Bank said in its Weekly Bulletin. 

In December, the Central Bank says remittance inflows was an all-time record of USD 350.6 million, compared to USD 299.6 million in December 2020, a 17.0 per cent increase. 

“The inflows were higher by 9.5 per cent compared to the USD 320.1 million in November, in line with seasonal factors.”

Diaspora remittances are part of Kenya’s largest foreign exchange earner, largely contributing to the country’s forex reserves aimed at stabilising the shilling.  

In addition, they remain the largest source of foreign exchange for the country in comparison to export earnings from tea and horticulture and now competes with inflows from foreign direct investments (FDI).

The World Bank says remittances to low and middle-income countries are projected to have grown a strong 7.3 per cent to reach USD 589 billion in 2021.  

For instance, inflows in Sub-Saharan Africa were 6.2 per cent up to $45 billion.

This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 per cent despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief. 

“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis. Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.

Remittances are projected to continue to grow by 2.6 per cent in 2022 in line with global macroeconomic forecasts.

Reducing Cost of Transferring Remittances Top on CBK’s Agenda