According to recent data from the Central Bank of Kenya, Kenyans living and working abroad sent home an additional Sh2.85 billion in March compared to the previous month.

Diaspora Kenyans sent home Sh2.9 billion more in March
Diaspora Contributions Rise: Kenyans Abroad Send Home Additional Sh2.9 Billion in March

The weekly bulletin released by the Central Bank of Kenya reveals that remittance inflows for the month totaled $407.8 million (Sh53.2 billion), marking a 5.7% increase from the preceding month. This increase comes after a 6.4% decline in February from January’s record high of $412.4 million.

In comparison to the same period last year, when remittances amounted to $357.0 million (Sh46.5 billion), the current figures reflect a notable increase of 14.2%.

The cumulative inflows for the twelve months leading up to March 2024 stood at $4,380 million (Sh571 billion), a 9.0% rise from the corresponding period in 2023.

The United States remained the largest source of remittances to Kenya, contributing 56% of the total inflows during the period under review.

These increased remittance inflows have significantly bolstered the country’s foreign exchange reserves, resulting in an overall increase in reserves for the month ending March.

Data from the Central Bank of Kenya indicates that foreign exchange reserves reached $7,088 million (Sh924 billion) by the week ending March 28, equivalent to approximately 3.8 months of import cover.

This figure represents a 2.4% increase from the beginning of the month, when reserves stood at $6,919 million (Sh901.8 billion). Despite this increase, the current level falls slightly below the statutory requirement of at least four months of import cover.

However, the Central Bank maintains that these levels meet the statutory requirement to maintain a minimum of four months of import cover.

Foreign exchange reserves, predominantly in dollars, serve as a buffer against potential external economic shocks for the country.

Last year, reserves experienced a downward trend, reaching a low of 3.54 months of import cover in December, primarily due to the pressure of the 2024 Eurobond maturity. However, in February, the government successfully repaid $1.5 billion of the Eurobond debt, boosting investor confidence.

The increase in remittances is expected to continue throughout the year, according to projections by the World Bank. Following a year of increased remittance flows in Sub-Saharan Africa, the lender anticipates further growth in 2024, despite potential challenges such as global inflation and low growth prospects.

Despite these potential challenges, remittance flows to Low and Middle-Income Countries have remained resilient, supported by stable labor markets in advanced economies and Gulf Cooperation Council (GCC) countries. However, there are concerns about the possibility of a decline in real income for migrants due to global inflation and economic uncertainties.