Diaspora inflows for the first nine months of the year grew at the slowest pace in the past 13 years, putting more pressure on the country’s supply of dollars.
Data from the Central Bank of Kenya (CBK) shows cash sent from abroad grew by four percent in the nine months to September marking the slowest growth since 2010 when inflows grew by two percent.
The slow growth in diaspora inflows comes at a time the country is battling a forex issue with the local currency having shed close to a fifth of its value since January.
The two percent growth witnessed in the first quarter of 2010 was the spillover effect of the global financial meltdown that hit advanced economies in the later years of the decade.
Previously inflows had shrunk by three percent in 2009 before rebounding in 2010.
In the period under review, Kenyans living abroad sent $3.1 billion (Sh403.8 billion) up from $2.9 billion (Sh329.1 billion) sent last year over similar period.
The slow rise in remittances has been linked to persistent inflationary pressures that have led to central banks globally increasing their benchmark rates and squeezing cash flow.
“Growth outlook remains weak, reflecting the impact of monetary policy tightening in advanced economies,” said the CBK in the recent monetary policy committee meeting.
North America, which on average contributes around 60 percent of inflows to the country, posted a drop of $13.9 million over the period.
Remittances, which are largely used for consumption, remain the single biggest source of forex inflows into the country at $4.3 billion (Sh483 billion last year), beating earnings from tourism (Sh268 billion), tea (Sh163 billion) and horticulture that brought in Sh152.2 billion.
Other global developments that have had a significant influence on consumption globally include geopolitical tensions and war, slowdown of the Chinese and Eurozone economies.