Kenyans in diaspora sent home Sh5.8 billion less in February on strong shilling
The US remained the largest source of remittances to Kenya, accounting for 53 per cent in the month under review.
Kenyans working and living abroad sent home Sh5.8 billion less in February compared to the previous month.
Latest figures by the Central Bank of Kenya (CBK) show remittance inflows for the month totalled $382.2 million (Sh49.5 billion), a 10.6 per cent decline from January’s $427.4 million (Sh55.3 billion).
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Compared to the same period last year when inflows totalled $385.9 million (Sh50 billion), the record represents a one per cent decrease.
“The cumulative inflows for the 12 months to February 2025 increased by 14.5 per cent to $4,956 million (Sh641.8 billion) compared to $4,330 million (Sh560.7 billion) in a similar period in 2024,” CBK says in its weekly bulletin.
The US remained the largest source of remittances to Kenya, accounting for 53 per cent in the month under review.
The declined inflows in February could be as a result of the arguably stronger shilling against the US dollar throughout the month under review.
Western Union’s inaugural Global Money Transfer Index says a majority, about 67 per cent of Africans abroad, send more money when the local currency value falls in their receiving country, with 65 per cent of receivers agreeing that when local currency values fall, they get more money.
In other terms, a weakening dollar against the local currency means receivers back home are not earning more in exchange as they used to be when the shilling was on a depreciating trend.
Steady against US dollar
Analysis shows the local currency has held steady against the US dollar for the past almost seven months to February this year, exchanging at an average of 129. In February alone, the shilling traded at an average of 129.30.
This, if compared to the period when the local currency traded at a historic low against the global benchmark, at 160, it is a 31-unit gain, representing a 19 per cent strengthening.
Ideally, when the local currency strengthens, it's often good news for the country in various aspects. However, in the remittance case, it's a disadvantage.
A strengthening shilling means relief to consumers, as a reduced burden of importation cost consequently trickles down to them, prompting a decrease in the general cost of living.
A strong shilling is also expected to boost the country’s forex reserves as importers strive for the much-needed dollar for imports.
Nevertheless, a strong shilling against the greenback is expected to cut down debt burden pressure since most of it is dollar-denominated.
According to WorldRemit research, Kenya is one of the continent's top recipients of remittances, with the country's primary uses being household needs, healthcare and education.
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