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CBK sees diaspora remittances reaching Sh676bn in 2026
Central Bank of Kenya (CBK) Governor Kamau Thugge appears before the Senate Committee on Devolution and Intergovernmental Relations, chaired by Senator Mohamed Abass Sheikh at Bunge Tower, Nairobi on July 24, 2025.
The Central Bank of Kenya (CBK) is expecting diaspora remittances to grow by four percent to $5.24 billion (Sh676 billion) this year, backed by a recovery in inflows from Saudi Arabia, where labour policy changes caused a sharp drop in volumes last year.
The growth in cash sent by Kenyans abroad stood at 1.9 percent in 2025 to reach $5.04 billion (Sh650 billion)—compared to a growth of 18 percent in 2024.
The CBK attributed the weaker growth mainly to a 25.06 percent decline in inflows from Saudi Arabia to $302.1 million (Sh39 billion) from $403.12 million (Sh52 billion) in 2024.
The increased recruitment of Kenyan workers into the Gulf region has boosted diaspora remittance flows from Saudi Arabia in recent years, swapping places with the UK as the second and third largest sources of the cash behind the US.
Saudi Arabia, however, started enforcing value-added tax on services last year, requiring money transfer platforms to charge and remit tax on transaction costs at a rate of 15 percent, raising the cost of sending money to countries such as Kenya.
The country also put in place sweeping labour market reforms, which disrupted wages, contract renewals and onboarding schedules for thousands of Kenyan workers, affecting their remittance behaviour and volumes.
CBK Governor Kamau Thugge said the regulator expects that the slowdown will reverse this year once the Saudi market adjusts fully to the changes.
“There were some changes in labour laws in Saudi Arabia, causing a 25 percent slowdown in remittances from the country. We expect that this trend will not be permanent and therefore there will be some recovery, which is why we have projected a growth of four percent in 2026 and five percent in 2027,” said Dr Thugge in a briefing last Thursday.
Starting June 2025, Saudi Arabia introduced a skill-based work-permit framework, which replaced the decades-old one-size-fits-all iqama system under which all foreign workers held the same residency and permit category, regardless of profession, education level or experience.
Under the new framework, foreign workers have been grouped into three categories (highly skilled, skilled and basic) based on academic qualification, experience, technical skills, wage bracket and age.
The top tier captured workers such as doctors, engineers and corporate executives, who are also required to have at least a bachelor’s degree and five years’ experience, while the skilled tier covers technicians, mid-level supervisors and craftsmen who are required to have vocational or secondary level education and two years’ experience.
The majority of Kenyan workers in the country, however, fall in the basic tier, which houses entry-level and manual roles that do not carry a formal education requirement, but are age-capped at 60 years.
The drop in Saudi flows saw it fall behind the UK in annual remittances for the first time in three years, with the latter seeing its flows grow by 0.72 percent to $360.21 million (Sh46.5 billion) last year. The US is Kenya’s largest source market of remittance dollars, with its 2025 volumes of $2.73 billion (Sh352.3 billion), accounting for 54.2 percent of total flows.
Diaspora remittances remain the biggest source of foreign exchange for Kenya, ahead of tourism receipts and agriculture exports, and a key contributor to the current account, which measures the balance between forex inflows and outflows.
