The Kenyan diaspora sent home 4.19 billion U.S. dollars in 2023, a 4% increase over the 4.028 billion dollars received in 2022, according to the Central Bank of Kenya (CBK).
This steady flow makes remittances one of the country’s biggest sources of foreign exchange, alongside exports like horticulture, tea, and tourism.
The United States remained the top source of remittances, contributing 56% in 2023. This helped propel Kenya to third place in Africa for diaspora remittance inflows, according to the World Bank’s “Leveraging Diaspora Finances for Private Capital Mobilisation” report.
Nigeria led the continent with 3.2 trillion Kenyan shillings (20.5 billion U.S. dollars), followed by Ghana with 771 billion shillings.
However, the report noted that Sub-Saharan Africa, including Kenya, saw slower remittance growth in 2023 due to sluggish economic performance in high-income countries where many migrants earn their incomes.
“The slowed growth in remittances observed in 2023 is explained by the slow pace of growth in the high-income economies where many Sub-Saharan African migrants earn their income,” reads part of the report.
Despite the slowdown, the World Bank projects a 1.9% increase in remittances to Sub-Saharan Africa in 2024, led by a 3% jump in inflows to Nigeria.
“The pace of remittance flows to Sub-Saharan Africa is expected to rise to 2.5% in 2024, from a 1.9% increase in 2023. The expected rebound is driven by a 3% increase in remittances to Nigeria, the largest recipient in the region.”
High Costs Remain a Hurdle
A major concern highlighted in the report is the high cost of sending money to Sub-Saharan Africa. At 7.8%, the average cost per transaction is significantly higher than the global average of 6.9% and far above the United Nations’ Sustainable Development Goal target of 3% by 2030.
Among different service providers, banks are the most expensive, charging an average of 12% during 2023 Q2. Post offices average 7%, money transfer operators 5.3%, and mobile operators 4.1%. Notably, mobile operators offer the cheapest option but handle less than 1% of total remittance volume.
Tips for Security and Safety in The Age of Digital Remittances
