Markets & Finance

Kenya diaspora inflows hit high of Sh130 billion

remittance

Diaspora remittances expanded by 10.7 per cent in 2014 compared to the previous year, hitting an all-time high of Sh129.99 billion. BD GRAPHIC | NATION MEDIA GROUP

Diaspora remittances expanded by 10.7 per cent in 2014 compared to the previous year, hitting an all-time high of Sh129.99 billion.

Last year’s inflows were the largest recorded since 2004 when the Central Bank of Kenya (CBK) began tracking remittances. In the first year, remittances stood at Sh30.79 billion.

The CBK said the amounts achieved in 2014 were an indication of confidence in the economy and increased investment opportunities.

“Diaspora remittances have maintained a strong upward trend annually since 2011, reflecting improved confidence in the economy, increased investment opportunities in Kenya,” said the CBK in a statement accompanying the data.

The growth in the cash remitted to Kenya was also seen to be a factor of better capture by the commercial banks as well as a result of the improving US economy. North America accounted for nearly half the remittances and recorded good growth.

READ: Remittances from US lift transfers to record Sh11.34bn

The US economy grew by five per cent in the July-September quarter, its quickest pace in 11 years that analysts said showed the economy had shifted into a higher gear. The growth was further proven sustainable when US homes sales data for December rose by 2.4 per cent.

Analysts said Kenya was also getting more remittances because of new sources, apart from the traditional ones, namely, North America and Europe.

“The country is getting more remittances from other countries besides North America and Europe. This is contributing to the higher amounts,” said Nicholas Malaki, chief investment officer at PineBridge Investment Company.

Mr Malaki noted that Kenyans in the Asian continent were now properly part of the diaspora and were sending money back home.

The CBK also underlined the contribution of other parts of the world in the increasing remittances.

“North America has dominated the remittances throughout but in more recent times, the rest of the world has been growing significantly,” said the CBK in the statement.

The CBK further noted that whereas the recessions or low economic growth in Europe had affected the growth of remittances from there, the continent’s share was not significantly affected.

“The downturn in Europe has not significantly affected the level of remittances but has affected their growth,” said the CBK.

The UK gross domestic product is estimated to have grown by only 0.5 per cent in the fourth quarter of the year.

Mr Malaki however said the December rise in the amount of remittances was also due to the festivities that take place in the course of the month. The December-on-December volume rose 15 per cent.

“Whereas Kenya is getting new sources of remittances, we cannot forget the fact that traditionally remittances increase in December due to the festivities,” said Mr Malaki.

As the monetary authority, the CBK conducts a survey on remittances every month. However, it only captures those that come through the formal channels such as commercial banks and other authorised international remittance service providers operating in Kenya.