Diaspora remittances drop to 14-month low
By Dominic Omondi | May 24th 2020
Money coming in from Kenyans living and working abroad dropped by Sh2.2 billion in April to total $208.2 million (Sh22.3 billion). This is compared to Sh24.5 billion received in March, according to the latest data from the Central Bank of Kenya (CBK).
It was the lowest monthly remittance since February last year when Kenyans overseas sent back home $199 million (Sh21.2 billion at today’s exchange rate).
However, the cumulative inflows in the 12 months to April were higher at $2,801 million (Sh299 billion) compared to $2,750 million (Sh294 billion) over a similar period last year.
“Remittance flows from the US and Canada (contributing about 58 per cent of all remittances in April) remained largely unchanged from March, while inflows from UK, Germany, South Africa, EAC region, United Arab Emirates and Saudi Arabia declined, reflecting the impact of Covid-19,” said CBK in its weekly bulletin.
CBK expects the Covid-19 pandemic which has disrupted economic activities around the world, to curtail the remittances, which have recently been critical pillars of the country’s exchange rate.
In March, diaspora remittances generally went up but inflows from South Africa, the United Arab Emirates, Mauritius and Oman declined, reflecting the impact of the coronavirus disease on a critical source of foreign exchange for the country.
Nearly 40 million people in the US have filed for unemployment as Covid-19 wipes out livelihoods in the world’s largest economy, and where a lot of Kenyans live and work.
So far, remittances from these regions have continued to flow in steadily. However, the tide of money from North America and Europe will not last forever as the pandemic hits these regions hard.
An article by CNBC showed that 70 per cent of companies in Dubai expect to go out of business in the next six months, a situation that would affect a lot of Kenyans working in the Gulf states.
Economists have noted that most Africans in the diaspora are employed in jobs that do not have safety nets, and are not eligible for the welfare cash that a lot of industrialised countries have provided for businesses and households in distress.
Currently, most of those abroad might have raised their remittances due to increased distress calls from relatives and friends back home who are feeling the heat of the pandemic.
Many Africans working overseas have either been laid off or sent on unpaid leave and are now living on their savings.
Diaspora remittances have become Kenya’s key source of foreign exchange reserves, more than even tea, coffee and tourism.
In the region, the World Bank expects diaspora remittances to decline sharply.
Expected to drop
“In 2020, remittance flows to low- and middle-income countries are expected to drop by around 20 per cent to $445 billion (Sh47.6 trillion), from $554 billion (Sh59.2 trillion) in 2019,” said the global lender in a new report on remittances and migration.
“In the midst of this sharp decline, the relative importance of remittance flows as a source of external financing for low- and middle-income countries is expected to rise.”
Nigeria remains the largest recipient of remittances in sub-Saharan Africa and is the sixth-largest beneficiary among low- to middle-income countries, with an estimated amount of $23.8 billion (Sh2.5 trillion) received in 2019, an increase of more than half a billion dollars compared to 2018.
Ghana and Kenya are ranked a distant second and third in the region, with $3.5 billion (Sh374 billion) and $2.8 billion (Sh299 billion) received, respectively.
The sins of power producer
- Fuliza defaulters to have KCB, M-shwari accounts blocked as Safaricom tightens rules
- Hope for cheaper cooking gas in sight as State eyes loading plant
- Senegal and Mali beat Kenya in internet speed
- What happens to Kenyan sailors in Chinese ships
SHIPPING & LOGISTICS
- Death of handmade toys holds back our innovation
By XN Iraki