•The US remains the largest source of remittances into Kenya, accounting for 55.5 percent in December, CBK says.
•Study by WorldRemit revealed Kenyans living and working abroad were forced to cut on their spending to afford sending money back home.
Kenyans living and working abroad defied the tough economic times to send home a record Sh497.2 billion in 2022, giving the much-needed support to families and friends back home.
Last year’s inflows were 8.3 per cent more compared to Sh458.9 billion sent in 2021.
According to the Central Bank of Kenya (CBK), inflows were strong in December at $357.3 million (Sh44.1 billion) , an increase of 3.4 Per cent compared to $345.4 million (Sh42.6 billion )in November.
“Remittance inflows in 2022 reached an all time record….the US remains the largest source of remittances into Kenya, accounting for 55.5 percent in December,” CBK says.
This is despite households in the US battling high inflation last year, which saw the Federal Reserve raise its benchmark interest rate to the highest level in 15 years, as a mitigation measure.
Inflation in the US hit a four-decade of 9.1 per cent in June.
Apart from the US, other key economies and sources of inflows, among them countries in Europe, were also hard hit last year amid recession concerns across the globe.
A study by Global digital payments company–WorldRemit revealed that Kenyans living and working abroad were forced to cut on their spending to afford sending money back home.
The survey conducted in June showed 49 per cent of respondents reported that they ate out less, 46 per cent saved on day-to-day expenses, while 28 per cent limited social gatherings to save money.
About 25 per cent of the respondents said they opted for public transportation rather than driving to save, part of which saw them continue to support families and friends back at home.
Households in Kenya have also remained exposed to high commodity prices, occasioned by among others, the weak shilling to the dollar as manufacturers pass on high import and production costs to consumers.
The country’s inflation hit a high of 9.6 per cent in October, before slightly easing to 9.5 per cent in November, and 9.1 per cent in December.
“Migrants’ resilience and commitment to their loved ones back home has proven to be vital, especially in a period where household expenses are increasing around the world,” said Jorge Godinez Reyes, Head of the Americas, WorldRemit.
The study proved that even during times of financial instability, many migrants are making adjustments to maintain the regular flow of remittances to families and loved ones back home, Reyes noted.
Majority(52%) however said they now send money to fewer people due to the tough economic times.
The survey involved 3,000 international money senders living in the USA, Australia, and the United Kingdom, aged 18 years and above.
They voluntarily responded to a 13-question survey about how cost of living and inflation had changed behaviours when it comes to sending remittances.
WorldRemit, which serves more than five million customers across 130 countries worldwide, including Kenya, received responses from 1,000 migrants in each of the countries surveyed, bringing the total number of respondents to 3,000.
Globally, 78 per cent of remittance senders agree that the cost of living has personally affected them.
About 75 per cent of respondents said the cost of living for those they send money to had increased since the beginning of last year.
Daily expenses, healthcare and educational support continue to be major reasons for sending money back home, WorldRemit notes.
The growth in remittances is welcome news for Kenya considering money sent back home by Kenyans in the diaspora represents one of the top sources of forex for the country, surpassing tourism, tea, and horticultural exports in recent years.
“Remittance inflows continue to support the current account and the foreign exchange market,” CBK adds.
The country’s forex reserves weakened towards the end of last year, even as CBK put a brave face.
In November, they fell to $7.19 billion (Sh887.5 billion) compared to $8.87 billion (1.094 trillion) same period in 2021, with the current account deficit widening as the country remained a net importer.
On Friday, usable foreign exchange reserves were at $7.41 billion (Sh915.3 billion), thanks to the inflows and the recent disbursement of a Sh52.7 billion loan by the IMF.
“The usable foreign exchange reserves remained adequate at 4.15 months of import cover as at January 12. This meets the CBK’s statutory requirement to endeavor to maintain at least four months of import cover,” CBK said in its weekly bulletin.
Kenya is among Africa’s top three recipients of diaspora remittances behind Nigeria and Ghana, according to a World Bank report.
The number of Kenyan migrant workers is over four million, according to the Labour ministry,with a greater percentage being skilled youth.
WorldRemit notes that the continued shift to digital remittance technologies has made it more convenient and affordable for those in the diaspora to send money back home.
By June last year, the company had processed transactions to Kenya worth Sh24.47 billion, putting annual figures at about Sh45billion.