Remittances from Kenyans in Diaspora rise

By John Njiraini and Reuters

Remittances from Kenyans abroad increased minimally last year to stand at Sh51.3 billion, the Central Bank of Kenya has said.

In a year that saw further recovery of the global economy, remittances increased by five per cent from Sh45.6 billion recorded in 2009.

The increase was an indication that leading economies in North America and Europe that account for most of the remittances are back on a strong footing after the global economic crisis, considering that in 2008, money sent back home stood at Sh45.8 billion.

However, the amount was a huge shortfall from the Sh150 billion the World Bank estimates Kenyans living abroad remit annually.

Last year, the World Bank conducted a study that showed 2.6 million Kenyans receive $2 billion (Sh150 billion) annually from Kenyans in the Diaspora.

It also showed that remittances have become a critical component in economic growth having become the country’s leading source of foreign exchange.

"Remittances could be the economic engine of Kenya in the 21st century," said Sergio Bendixen, the President of Bendixen & Associates who conducted the study on behalf of the World Bank in collaboration with CBK.

According to CBK, remittances are the fourth-largest source of foreign exchange in the country after tea, horticulture and tourism.

Foreign exchange earner

Tea has become Kenya’s leading foreign exchange earner after raking in Sh97 billion last year up from Sh69 billion in 2009.

However, expectations are high that tourism could become the leading foreign exchange earner when official earnings for last year are released in coming days. According to tentative projects by the Ministry of Tourism, the sector earned a staggering Sh100 billion last year.

The CBK said Kenyans sent a total Sh5.2 billion in December last year, the highest amount sent in a single month during the whole year.

While the perception has been that most of the money sent from abroad is spent on daily expenses like food, clothes, housing, utility bills and medicine, a huge chunk of the cash is in fact used on ventures aimed at uplifting the recipient’s living standards.

The World Bank study showed that about 35 per cent of recipients spend the money investing in small businesses, 33 per cent to pay for university education for family members, eight per cent invest in land or a house, while four per cent open a savings account.

Only 20 per cent spend the money on daily expenses.