Kenyans abroad sent home Sh49.3b in May, says CBK
By Noel.Wandera, June 19, 2023
Kenyans in the diaspora sent home $352.1 million (Sh49.3 billion) in May 2023, a 9.9 per cent increase from the $320 million (Sh44.8 billion) they wired in April helping to shore up dwindling foreign exchange (Forex) reserves.
Central Bank of Kenya (CBK) says the accumulative inflows for the 12 months to May totaled $3.997 billion compared to $3.992 billion in a similar period in 2022, an increase of 0.1 per cent.
In the review period, the regulator said the US accounted for 54 per cent remaining the largest source of remittances inflows.
“The remittance inflows continue to support the current account and the foreign exchange market,” CBK said in its weekly bulletin.
As of June 15, the regulator said usable forex reserves were adequate at $7,459 million (Sh1.04 trillion), equivalent to 4.11 months of import cover and meeting the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover.
The forex cover dropped below the four months mark in November last year as a result of external debt servicing obligations with Kenya unable to acquire external financing, but has since been boosted following receipt of a $1 billion (Sh139.3 billion World Bank loan. In May, the reserves stood at $6.152 billion) Sh854 billion equivalent to 3.62 months of cover.
The regulator maintains Forex reserves to balance Kenya’s payments, help influence the forex rate and support confidence in the market. They are essentially CBK’s back-up funds used to stabilize the shilling to reduce volatility.
The forex rise will offer some respite for the weak shilling, which though stable against international and regional currencies according to CBK was on the verge of breaching the Sh140 mark against the Greenback, exchanging at Sh139.71 per US dollar on June 15, compared to Sh139.11 per US dollar on June 8.
Remittances not only represent an important source of forex but also support many livelihoods.
According to an analysis by WorldRemit, education, healthcare, and household needs are the main uses of remittances in Kenya, sectors that tend to have a multiplier effect on development.
The company also noted that Kenya is among the top 3 countries in Africa in receiving remittances, Nigeria came first followed by Zimbabwe. Digitization remains a key driver for the growth of remittance services, according to WorldRemit, which has partnered with local banks, allowing direct sending of money to accounts, and M-pesa