Kenyans will receive less money from the diaspora this year as the coronavirus pandemic continues to hurt the global economy.
According to a new study by the World Bank, global remittances are projected to decline sharply by about 20 per cent this year due to the economic crisis induced by the virus.
The remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 per cent to $445 billion (Sh47.1 trillion), signalling a loss of a crucial financing lifeline for many vulnerable households.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by Covid-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass. Last year, Kenyans working and living abroad sent home a record $2.7 billion (Sh280 billion), according to the Central Bank of Kenya (CBK).
This reflected a 3.7 per cent growth from 2018 when diaspora remittances stood at $2.6 billion (Sh272.3 billion).
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The projected drop in money from abroad has been compounded by the loss of wages as many workers in foreign countries have been laid off or put on unpaid leave, with many source countries imposing total lockdowns.
Majority of African migrants reside in the EU, the United States, the Middle East and China. These economies are a source of close to a quarter of total remittances sent to the region.
Last year, diaspora cash to Kenya came from North America, which accounted for the biggest share at 50 per cent, with Europe accounting for 20 per cent, while “the rest of the world” accounted for the remaining 30 per cent.
The World Bank study also found an increase in remittance cost, with the global average cost of sending $200 remaining at a high of 6.8 per cent in the first quarter of 2020, with sub-Sahara Africa having the highest average cost of nine per cent.
“Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families. These include treating remittance services as essential and making them more accessible to migrants,” said Dilip Ratha, lead author of the report.
But the sector is expected to improve by four per cent in 2021 if the pandemic doesn’t spill over to the last quarter of the year.