Kenya’s monthly diaspora remittances from Saudi Arabia have dropped to the lowest levels in four years in the wake of the implementation of a new skills-based foreign worker permit system in the Gulf nation.
Central Bank of Kenya (CBK) data shows cash wired back home by Kenyans in Saudi Arabia slid to $16.30 million (Sh2.11 billion) in August and $16.85 million (Sh2.18 billion) in September.
The flows in those two months have nearly halved (fallen by 46.83 percent) from an average of $31.17 million (Sh4.03 billion) in the first seven months of the year, falling to levels last seen in September 2021 at $16.61 million (Sh2.15 billion).
The inflows are also 50.67 percent lower than $33.59 million (Sh4.34 billion) monthly average for 2024, signalling a sudden break in a corridor that had previously been Kenya’s fastest-growing source of diaspora dollars.
Saudi Arabia implemented a skill-based work-permit system mid this year, with reclassification of existing workers starting June 18 and categorisation for new arrivals from July 1.
Enforcement of the new policy for existing workers, including thousands of Kenyans, kicked in on July 5, while new recruits were put on the new regime from August 3.
The new framework has placed foreign workers in three skill groups —highly skilled, skilled and basic— using a mix of academic qualifications, experience, technical capabilities, wage brackets and age.
The highly skilled tier includes doctors, engineers, IT specialists and corporate executives, requiring at least a bachelor’s degree and five years’ experience.
The skilled category covers technicians, mid-level supervisors and craftsmen with at least secondary or vocational training plus a minimum of two years’ experience.
The basic tier, on the other hand, covers entry-level and manual labour roles, with no formal education requirement, but is restricted to workers below the age of 60.
The shift has replaced the decades-old, one-size-fits-all iqama model under which all foreign workers— from janitors to surgeons— held the same residency and work permit category regardless of job description, education or work experience.
Saudi Arabia’s Ministry of Human Resources and Social Development enforced the reform to align talent deployment with the country’s economic transformation priorities, curb over-reliance on low-skilled staff and boost productivity.
But for Kenya, whose migrant flows to Saudi Arabia are dominated by basic and lower-skilled categories, the transition appears to have interrupted wages, contract renewals, onboarding schedules and cash transmission.
The slowdown cut the diaspora remittance flows from Saudi Arabia by 16.87 percent in the first nine months of 2025 to $251.33 million (Sh32.48 billion) from $302.35 million (Sh39.08 billion)—the first annual contraction since the CBK started publishing full-year country-level series in 2020.
That has allowed the UK to leapfrog Riyadh to become Kenya’s second-biggest source of diaspora dollars for the first time since the January–September 2022 period.
The CBK’s tallies show Saudi Arabia had been the single most significant driver of incremental remittances between 2021 and 2024, widening from $88.32 million (Sh11.41 billion) in January–September 2020 to more than $300 million in the same window last year.
That expansion, driven by domestic work placements, contract formalisation and rising Gulf wage floors, had turned Saudi from a fringe source into a macro factor in Kenya’s foreign exchange flows.
By contrast, the diaspora flows from the UK have been gentler, rising from about $150.52 million (Sh19.45 billion) in the first nine months of 2020 to $262.53 million (Sh33.93 billion) in the same period this year. However, this year’s flows have fallen 2.97 percent from the record $270.58 billion in the January-September 2024 period.
The slowdown from Saudi Arabia has come in the middle of a policy transition window.
Since taking office in September 2022, President William Ruto has framed bilateral labour deals as a foreign-policy instrument to create offshore jobs for Kenyan youth and to raise remittance inflows.
“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 enhance our remittances from abroad,” Dr Ruto said in May 2024. “I am committed, and I believe that is doable because I can see that we are on the right trajectory.”
The United States has maintained the anchor, with flows in the January–September 2025 period crossing $2 billion for the first time, accounting for more than 54 percent of total flows.
Kenyans in the US sent back home $2.05 billion (Sh264.94 billion) in the review nine-month period, a rise of 5.70 percent, or $110.42 million (Sh14.27 billion), over $1.94 billion (Sh250.73 billion) a year ago.
The US stability has helped push Kenya’s aggregate inflows to more than $3.77 billion (Sh487.23 billion) in the first nine months of 2025 from $3.64 billion (Sh470.43 billion) last year —a growth of 3.70 percent.
