January diaspora inflows rise 4pc to hit Sh26 billion
This is an improvement of 3.6 per cent from the Sh25 billion ($250.3 million) that was sent in December last year, according to the Central Bank of Kenya (CBK) data.
“The cumulative inflows in the 12 months to January 2020 increased to $2,811 million (Sh281.1 billion) compared to $2,733 million (Sh273.30 billion) in 2019, reflecting a growth of 2.8 per cent,” said CBK in its latest weekly bulletin.
North America, Europe and the rest of the world accounted for 48 per cent, 17 per cent and 34 per cent, respectively, of the total remittances in January.
Diaspora remittances have become critical pillars to the shilling at a time when the country’s exports, the country’s main foreign exchange earner, have underperformed.
Nonetheless, export earnings and diaspora remittances propped up the shilling against a spike in global oil prices and increased payment of interest to foreign investors.
As a result, Kenya gained more foreign currency with the shilling’s exchange rate against the dollar remaining steady at around 101 throughout 2019.
The money workers send home to their families from abroad has also become a critical part of Kenya’s economy, with President Uhuru Kenyatta taking note of this impact.
In his Jamhuri Day Speech last year, the president noted that diaspora remittances have since overtaken coffee and tea to become the country’s main foreign exchange earner.
The inflows from Kenyans living and working abroad surged to an all-time high of $295 million (Sh30.30 billion) in June 2019, before it reduced in the subsequent months.
The head of State attributed this improvement on the country’s human capital, which he noted, had not only propelled the Kenyan economy, but also that of other nations.
“Our highly-educated citizens are much sought after all over the globe. To signify the changing fortunes of our homeland, diaspora remittances grew by 10.9 per cent from Sh266.19 billion to Sh295.32 billion between June 2018 and June 2019, overtaking earnings from export of tea and coffee as the country’s largest source of foreign exchange,” said the head of State.
However, some experts have attributed the surge to the changes in the law.This is because the record-breaking remittance inflows coincided with the lapse of the June-30 deadline for the return of taxable money stashed outside the country.
The significant reading in June is an indicator that there might have been a rush to beat the deadline given by former National Treasury Cabinet Secretary Henry Rotich in his 2018/19 budget statement on any taxable cash in foreign countries.