Australia pips Saudi Arabia in Kenya’s cash inflows

dollar

The US remains by far the largest source of diaspora flows to Kenya.

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Australia has emerged as the fastest-growing source of diaspora remittance flows in the half-year period ended June amongst top sources, official data shows, overtaking Saudi Arabia.

This came in a period when Kenyans living abroad wired home $2.38 billion (about Sh311.83 billion under prevailing conversion rate of Sh131.05 per US dollar), a 16.99 percent rise over $2.033 billion (about Sh266.53 billion).

The cash wired home grew at the fastest pace since a similar period in 2021 when flows increased 19.72 percent to $1.75 billion (about Sh229.39 billion under prevailing conversion rates) at a time when inflationary pressures in developed economies are easing, according to data from the Central Bank of Kenya.

The data, based on money through formal channels, shows cash sent by Kenyans in Australia rebounded from a 29.78 percent drop last year to grow 85.94 percent to $76.31 million (about Sh10 billion) in the six months.

Germany, which in May reached a deal on streamlining labour migration rules with Kenya, posted the second-largest growth amongst the top five sources of diaspora remittances which account for about three-quarters of the flows.

Money wired by Kenyans in Europe’s largest economy jumped 40.93 percent to $103.11 million (about Sh13.51 billion).

The two countries have outpaced Saudi Arabia, a top destination for domestic and semi-skilled labourers, which has in recent years been the highest-growing source of remittances to Kenya.

Flows from the Middle East’s economic powerhouse moderated in the half-year period, rising 9.95 percent to $202.23 million (Sh26.50 billion) to remain the second largest source.

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.

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.

The US remains by far the largest source of diaspora flows to Kenya, about half (52.58 percent) or $1.25 billion (Sh163.97 billion) of the total remittance flows.

The share of the US has, however, reduced from 57 percent a year ago.

Kenyans in the UK sent home $183.44 million (Sh24.04 billion), a growth of 8.34 percent over a year ago.

Growing employment opportunities for Kenyans in foreign countries rank top of President William Ruto’s job creation strategy, together with the affordable housing programme.

Dr Ruto has since taken power in September 2022 pledged to negotiate bilateral labour deals with developed economies in a bid to create jobs for growing skilled and semi-skilled Kenyan youth abroad.

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