Economy feels the pinch as June inflows drop Sh2.1b

Kenya relies heavily on diaspora remittances for household incomes and foreign exchange stability. [Courtesy]

The financial stability of Kenyan households and the broader national economy are under increasing strain following a sharp decline in crucial diaspora remittances in June 2025.

This significant month-on-month drop coincides with an escalating US immigration crackdown under President Donald Trump, directly impacting the ability of many Kenyans abroad to support their families and contributing to a wider economic downturn.

Data from the Central Bank of Kenya (CBK) reveals that diaspora remittances to Kenya declined by $17 million (Sh2.1 billion), or 3.86 per cent, in June.

"Total remittances for the month stood at $423 million (Sh54.57 billion), down from $440 million (Sh56.76 billion) recorded in May," noted the CBK report.

The decline raises concerns for Kenya, which is heavily reliant on these inflows for household incomes and foreign exchange stability.

The US, which supplies 54 per cent of Kenya's remittances, remains the largest source.

While June 2025 inflows were still 13.8 per cent higher than June 2024 ($372 million), and the 12-month cumulative total rose 12.1 per cent to $5.084 billion, the monthly dip has sparked alarm.

Remittances are a key pillar supporting Kenya's foreign reserves, balance of payments, and the recent rally of the shilling against the dollar.

The timing is sensitive. The Trump administration is advancing policies, including a proposed one per cent tax on cash remittances, part of a bill in the US Senate aiming to raise $10 billion (Sh130 billion).

Proponents, like Lora Ries of The Heritage Foundation, argue it could deter illegal immigration by making it harder to send money home.

The policy forms part of a broader crackdown featuring reduced refugee resettlement, increased raids, and anti-migrant rhetoric.

Reports suggest the hostile climate is causing anxiety among immigrants, including green card holders, with some transferring savings out of the US amid fears of forced departure.

This Trump crackdown may be contributing to Kenya's remittance dip, analysts said.

For Kenya, these funds are a lifeline. World Bank data shows remittances reduce poverty, improve nutrition, increase birth weights, and boost school enrollment.

They help families build resilience, finance housing, and weather disasters.

The dip complicates President Ruto's August 2024 initiative to create one million overseas jobs for Kenyans - a plan aimed at tackling unemployment while boosting remittances and forex earnings to strengthen the shilling.

With an estimated four million Kenyans abroad, predominantly in the US, Europe, and the Middle East, policy shifts affecting their ability to send money home have immediate consequences for thousands of Kenyan families.