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Kenyans in diaspora sent home record-breaking Sh670 billion in 2023

Directline is said to control more than 60 per cent of the public service vehicles (PSVs) insurance market. (Photo: File)

By Amina Wako | Wednesday, January 24, 2024

This remarkable figure reflects a four per cent increase compared to the previous year.

Kenyans living in the diaspora have emerged as a crucial contributor to Kenya's economic landscape, playing a significant role in the country's financial stability.

In 2023, the remittances from Kenyans abroad reached an unprecedented milestone, surging to an all-time high of Sh671 billion ($4.19 billion).

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This remarkable figure reflects a four per cent increase compared to the previous year, as reported by the Central Bank of Kenya.

A significant driver of this growth was the remarkable increase in diaspora receipts from within Africa, which soared by more than 50 per cent year-on-year in the 12 months leading up to November 2023.

The United States retained its position as the largest source of diaspora remittances, contributing 56 per cent to the record-breaking figure, reflecting a one per cent increase from the previous year.

The top sources of remittances also included Canada, the United Kingdom, Germany, Saudi Arabia, the United Arab Emirates, and Australia.

Diaspora remittances and tourism receipts play a pivotal role in mitigating the impact of falling export revenue on the country's current account balance, as acknowledged by the International Monetary Fund (IMF).

In its latest country report for Kenya, the IMF stated, “Tourism receipts exceeded pre-pandemic [Covid-19] levels and, together with robust remittances, supported external balance.”

The sustained growth in diaspora remittances was crucial in narrowing the current account deficit to 4.1 per cent of the gross domestic product (GDP) in 2023, down from 5.2 per cent in 2022.

As traditional exports like tea, coffee, and horticulture faced challenges due to subdued global demand, diaspora remittances emerged as a beacon of economic stability.

IMF executive director Willie Nakunyada highlighted the shifting dynamics, stating, “The traditional exports of tea, coffee, and horticulture underperformed in line with subdued global demand.”

Looking ahead, the IMF foresees a continued growth in diaspora remittances over the medium term, playing a pivotal role in sustaining the positive trajectory of the country's current account balance. This positive outlook aligns with expectations of a rebound in exports and a persistent growth in tourism receipts beyond pre-pandemic levels.