The UK has overtaken Saudi Arabia to become the fastest-growing source of diaspora dollar flows into Kenya among the top global markets for remittances on the back of easing inflation pressures, the latest official data shows.
Kenyans working and living in the UK wired home nearly $112.40 million (about Sh14.95 billion under current conversion rates) in the first three months of the year, according to data tracked by the Central Bank of Kenya, a jump of 42.57 percent over $78.83 million (Sh10.48 billion ) in the same period last year.
The jump in remittances from Europe’s second-largest economy outpaced Saudi Arabia, whose rise appears to be slowing this year after skyrocketing in the last two years.
Inflows from Saudi Arabia grew by 14.29 percent in the first quarter of the year to $101.36 million (Sh13.48 billion), a slower pace than 26.99 percent a year ago and 99.28 percent in 2022.
The UK’s 42.57 percent climb in the first quarter was the highest among the four largest sources of diaspora remittances—the US, the UK, Saudi Arabia, and Germany—which control about three-quarters of the cash sent back by Kenyans abroad on average. The jump helped the UK regain its spot as the second-largest source after Saudi Arabia.
The US remains by far the largest source of diaspora remittances, controlling 53.44 percent, or $644.50 million (Sh85.72 billion), of the total flows in the review three-month period. Cash wired back home by Kenyans in the US grew 8.84 percent over $592.14 million (Sh78.75 billion) in the first quarter of 2023.
Germany remained the fourth largest source of remittance flows after Kenyans there transferred $43.44 million (Sh5.78 billion) back home, an 11.60 percent rise year-on-year.
The bump in dollar flows by Kenyan workers in the UK came at a time when inflation in that country closed the quarter at its lowest level in two and a half years. UK’s price growth eased to 3.2 percent in March, the softest rate since September 2021.
Slower growth in inflation frees up cash, leaving workers with more disposable income to spend than in a high inflationary environment witnessed from early 2022 through last year.
Soaring energy and food prices on supply disruptions that followed Russia’s brutal invasion of Ukraine in February 2022 had pushed up living costs in the US and Europe to decades-high, eating into disposable income that Kenyans in those countries tap to help families and dependents back home.
That had left Saudi Arabia, a key destination for Kenya’s unskilled and semi-skilled labourers fleeing rising unemployment, as the biggest driver of the remittances into Kenya.
Diaspora remittances have since 2015 remained the largest source of foreign cash flows into Kenya, ahead of tourists, foreign direct investments, and leading agricultural exports such as horticulture and tea.
Kenyans abroad wired home a total of $1.21 billion (Sh160.93 billion) in the January–March 2024 period, the CBK data shows a rise of 18.77 percent over $1.02 billion (Sh135.66 billion) in the corresponding period last year.
“It is my intention that every year we should be able to send 250,000 Kenyans to work in different parts of the world so that we can enhance and increase the number of people working abroad and our remittances from abroad,” President William Ruto said on May 1. “I am committed, and I believe that is doable because I can see that we are on the right trajectory.”
Growing job opportunities for Kenyans in foreign countries rank top of President Ruto’s job creation strategy, together with the affordable housing programme. He recently said Kenya was reworking its immigration laws and looking at signing bilateral labour deals with developed economies in a bid to create jobs for growing skilled and semi-skilled Kenyan youth abroad.
The administration is targeting to more than double the diaspora remittance flows to $10 billion.
Kenyans living abroad sent nearly $5.05 billion (about Sh671.65 billion under current conversion rate) back home in the year ended December 2023.
This is higher than Sh268. 09 billion receipts from tourists, Sh163.12 billion earnings from tea exports and an estimated $759 million (about Sh100.95 billion) in foreign direct investments in 2022.
The largest share of the remittances goes into supporting families at home buy food and household goods as well as pay medical bills and school fees, according to CBK-commissioned Kenya Diaspora Remittances Survey Report of December 2021.
Shem Ochuodho, the global chairman of Kenya Diaspora Alliance, has maintained that incentives such as tax rebates – usually given to foreign investors – could see the bulk of cash go into direct investments back home.
“We are focusing on creating awareness on investment opportunities in key sectors both at national level and the counties,” Dr Ochuodho said last December. “But as we have always said ‘if you want milk from a cow, you first fatten it’. There’s no reason why the Kenyan diaspora cannot match the kind of investments we have seen in some countries like the Philippines if they are given incentives.”
Dr Ruto last year made Germany and Saudi Arabia top hunting grounds for jobs for Kenyans following the State visit of Chancellor Olaf Scholz on May 5 and his visit to Saudi Arabia last November.
