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Remittances from US lift transfers to record Sh11.34bn

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Total remittances which were handled by 45 banks and money transfer agents for August stood at Sh11.3 billion. PHOTO | FILE | NATION MEDIA GROUP

Summary

  • Latest data from the Central Bank shows overall month-on-month diaspora remittances increased by 10 per cent or Sh1 billion between July and August. Compared to August 2013, remittances last month represented an increase of 20.3 per cent.

A 22.4 per cent month-on-month rise in diaspora remittances from the US lifted the transfers to a record Sh11.34 billion ($128.8 million) in the month of August providing a measure of comfort to the Kenya shilling.

Latest data from the Central Bank shows overall month-on-month diaspora remittances increased by 10 per cent or Sh1 billion between July and August. Compared to August 2013, remittances last month represented an increase of 20.3 per cent.

US remittances in August topped Sh5.63 billion ($64 million), the highest monthly figure this year, while those from Europe and the rest of the world came to Sh2.78 billion ($31.5 million) and Sh2.93 billion ($33.3 million) respectively.

CBK governor Njuguna Ndung’u described the remittances as “encouraging outcome” coming at a time when hard currency inflows into the country have been hit by lower tourist numbers arising from security concerns and reduced earnings from tea and horticulture. Cumulatively, the remittances in the eight months to August 2014 stood at Sh82.5 billion, compared to Sh73.8 billion over a similar period last year.

Kenyans living abroad usually send money home to support their families and for investment in various sectors, mainly real estate. Incidentally, the rise coincided with a climb at the Nairobi Securities Exchange.

Total remittances for 2013 stood at Sh110 billion ($1.3 billion) and the 2014 total looks set to eclipse this going by the month-on-month increases registered so far this year.

Seven banks — CfC Stanbic, Chase Bank, Cooperative Bank, Equity, KCB, DTB, and NIC — handled 65 per cent of the total remittances for August. The Central Bank listed a total of 45 banks and money transfer agents, including Safaricom M-Pesa which accounted for Sh576.6 million worth of remittances.

The increasing remittances will also make encouraging news for the Treasury which is preparing to issue a diaspora bond.

Treasury cabinet secretary Henry Rotich told the Business Daily in an interview earlier this month that the government intends to tap Kenyans living abroad for a diaspora bond to be issued by the end of next June, coming in the wake of the successful $2 billion (Sh178 billion) Eurobond issue that was oversubscribed four times.

READ: Plans for Kenya’s Diaspora bond almost complete

The Treasury has started structuring the debt paper but Mr Rotich did not give details of its size, tenure and return. The issue will be shilling-denominated, translating to lower foreign currency exposure.

“Instead of remitting cash to relatives, the Kenyans abroad can instruct us to pay the interest from the bond directly to the relatives,” he said.

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