Kenyans abroad sent home Ksh.422 billion in 2021

Kenyans living abroad sent home a record Ksh.421.6 billion ($3.718 billion) last year, setting a new all-time record for the diaspora remittances across a single year.

Fresh data from the Central Bank of Kenya (CBK) shows the remittances grew by 20.2 per cent from Ksh.350.9 billion ($3.094 billion) in December 2020.

December saw the highest remittances in the 12 months cycle as Kenyans in the diaspora sent home Ksh.39.8 billion ($350.6 million) - a new monthly record for the forex flows.

The December inflows were 9.5 per cent higher than Ksh.36.3 billion ($320.1 million) sent in November.

Across the year, the United States remained the largest source of remittances into the country, accounting for 63.2 per cent of the flows in 2021.

Diaspora remittances remain the largest source of foreign exchange for the country in comparison to either of the export earnings including tea and horticulture and now rival inflows from foreign direct investments (FDI).

The inflows have become increasingly important across the stay of the COVID-19 pandemic having defied the global health crisis to sustain a growth momentum.

This has seen financial institutions and other parties take notice initiating key studies to understand the FX flows better.

For instance, the CBK initiated a three-month survey of the diaspora remittances as it sought a deeper understanding of the sources of the flows, use and remittance methods.

Meanwhile, a survey last year by non-profit Pangea Trust established that about half of the diaspora remittances go into supporting family and friends, taking Ksh.49 out of every Ksh.100 sent.

According to the survey, charities and religious groups come in second place taking about 17 per cent of the remittances.

Investments meanwhile take up about 15 per cent of the flows and include largely the support for setting up businesses and buying real estate.

Diaspora remittances are not only a key source of funding for households but also a key source of FX earnings for government