The Central Bank of Kenya (CBK) said the cost of remittances to Kenya is averaging about seven percent, which is slightly below the average of eight percent for sub-Saharan Africa.
In the 10 months to October 2021, Kenyans living abroad have sent home an average of Sh34.3 billion ($304.7 million) per month, a 20.4 percent jump compared to the Sh28.5 billion remitted in the corresponding period last year.
Kenyans living abroad are spending an average of Sh2.4 billion per month in costs when sending money home to their relatives, with those using banks to remit cash, paying more compared to the ones utilising digital channels.
The Central Bank of Kenya (CBK) said the cost of remittances to Kenya is averaging about seven percent, which is slightly below the average of eight percent for sub-Saharan Africa but well above the ideal target of three percent.
In the 10 months to October 2021, Kenyans living abroad have sent home an average of Sh34.3 billion ($304.7 million) per month, a 20.4 percent jump compared to the Sh28.5 billion remitted in the corresponding period last year.
“The issue of cost is a big concern, not just for Kenya but around the world, especially those countries in the emerging markets which are recipients of a large amount of remittances,” said CBK governor Patrick Njoroge on Tuesday.
“In Kenya, it has come down to about seven percent but it’s still varied. As part of SDGs (Sustainable Development Goals), the expectation is to bring down the cost to around three percent by 2030.”
He added that the CBK survey on remittances that was carried out earlier this year and whose results would be published soon would help in the efforts to bring down costs.
“It will start the conversation on remittances and how to strengthen them, not just the volumes, but also in terms of cost, speed and security. We do have good ideas in terms of lowering the costs,” said Dr Njoroge.
The survey sought to establish, among other things, the efficiency and cost of alternative remittance channels, difficulties of remitting money, the availability of information to Kenyans in the diaspora about investment and the use of remittances.
The CBK has in recent briefings stated that improved remittance channels have helped raise the amount being sent home, largely through the adoption of digital channels that make it easier and cheaper to send and receive money.
A World Bank report on global remittances released last month noted that African remittance costs are higher than other regions of the globe due to small quantities of formal flows.
Sub-Saharan Africa’s average cost of eight percent is nearly double that of South Asia’s 4.6 percent, which is the lowest regional cost in the world.
It also found that costs tend to be higher when remittances are sent through banks than through digital channels or money transmitters offering cash-to-cash services.
“Costs averaged eight percent in the first quarter of 2021, down from 8.9 percent a year ago. Although intra-regional migration makes up more than 70 percent of cross-border migration, costs are high due to small quantities of formal flows and utilisation of black-market exchange rates,” said the World Bank.
The Bretton Woods lender calculates the cost of remittances based on the cost of sending $200 across international borders.
The global average of sending money across borders stands at 6.4 percent as per the latest calculations based on the first quarter of 2021 remittances.
