Markets & Finance

Kenyans abroad send home record Sh14bn in April


Remittances are important to Kenya as they are the largest source of foreign currency. PHOTO | FILE

Kenyans working abroad sent home a record Sh14.4 billion ($143.5 million) in the month of April with those living in the US being the main contributors.

Diaspora remittances shot up 15.3 per cent compared to a similar month last year with inflows from North America contributing half of total amount remitted.

“Remittance inflows from North America increased by 4.7 per cent and accounted for 50.2 per cent of total inflows in April 2016. Inflows from the rest of the world also increased by 8.4 per cent while that from Europe decreased by 7.3 per cent,” said the Central Bank of Kenya (CBK) in an update.

The American economy has recovered strongly from the global financial crisis leading to increase in remittances as those who had fallen out of the job market are reabsorbed.

The Eurozone is still picking itself up with some countries such as Greece, Portugal and recently France still struggling.

Remittances from the US rose by Sh1 billion between the month of February and April to Sh7.2 billion resulting in its contribution growing to 50.2 per cent from 45.3 per cent two months ago.

Remittances are important to Kenya as they are the largest source of foreign currency and provide the biggest cushion against the country’s exchange rate.

READ: Remittances hit Sh154bn last year, easing pressure on falling shilling

The shilling has held steady against the dollar in the last few months allowing the CBK move to ease its monetary policy stance by a one percentage point of the indicative Central Bank Rate.

Diaspora remittances help narrow the country’s balance of payments deficit supporting a stronger local currency.

Recent data shows the country’s current account deficit is currently 6.8 per cent of GDP down from 9.8 per cent in 2014.

The government has been reaching out to the Kenyans in the diaspora with forums with those in the diaspora now a common feature in the President’s itinerary when he travels abroad.

The forums are usually focused on showing the country as a prime investment destination and showcasing financial sector efforts to safeguard cash transfer systems.