Markets & Finance

Remittances from Kenyans abroad grow by 33 per cent

CBK

The Central Bank of Kenya (CBK) has licensed another micro-finance institution as it seeks to make financial services accessible to more people.

Remittances from the diaspora has hit an eight-year high of Sh22.7 billion ($266.5 million) over the four months of the year as incomes stabilised and as Kenyans living abroad sent more home to help families in the harsh economy.

According to the Central Bank of Kenya (CBK), diaspora remittances jumped by 33 per cent to Sh5.95 billion ($70.1 million) in April compared to Sh4.5 billion ($52.68 million) in the same month last year. Total remittances over the first four months of 2010 stood at Sh16.7 billion ($196.5 million) compared to Sh16 billion ($196.4 million) in 2009.

“The increase in remittances reflects economic recovery in source markets, and a favourable domestic economic environment,” said Charles Koori, director research department at the CBK.

Hardship in country

Mr Koori said the source markets for remittances have on average remained the same with North America contributing 56 per cent and Europe 26 per cent in April this year, compared with an average of 52 per cent and 30 per cent respectively in the same period last year.

James Dry, the managing director of Dry Associates Limited Kenyans abroad could be sending in more money because of the hardship in the country following increased food and fuel costs.

“People need money and for every dollar you sell here you are now getting more that you would get a few months ago,” said Mr Dry.

High returns

Analysts said the high returns in sectors such as real estate is attracting investors into Kenya. “Some western economies are improving and Kenya has some sectors which are growing very fast like real estate,” said Mr Dry.

Paul Mwai, chief executive of African Alliance Kenya Management Company said Kenyans abroad, who had been laid off during the recession and who are now finding work opportunities could be sending more into the country as there were better incentives to save in Kenya through higher returns.

“The rising inflation could also be a factor as people send more to help those in the country,” said Mr Mwai, adding that the diaspora could also be finding investment opportunities cheaper because the amounts sent into the country are able to buy more due to a depreciated shilling.