US remittances share grows as Europe lags

The Central bank of Kenya, Nairobi on Sunday, November 22, 2020. PHOTO | DENNIS ONSONGO | NMG

North America now accounts for two-thirds of all diaspora remittances into Kenya, taking a larger market share at a time when money sent home from Europe has dropped to a 13-month low.

New data from the Central Bank of Kenya (CBK) on remittances by source country shows that the Americas accounted for 67 percent of the remittances sent home in October, up from 51 percent in February 2019, the earliest date available for the breakdown.

Meanwhile, Europe’s share of remittances has dropped from 25 percent to 14 percent in the period.

The rise in US remittances at a time when Europe’s is shrinking reflects the severity of the economic hits on the two regions during the Covid-19 period, with European economies suffering more due to harsher restriction measures imposed to control the spread of the virus.

“Generally it is Covid-19 disruptions that have affected diaspora flows…Europe was affected more because they had more punitive restrictions and longer lockdown periods,” said George Bodo, head of research at Genghis Capital.

In October, remittances from North America stood at Sh25.5 billion ($226 million), a new all-time high from the area, while those from Europe stood at Sh5.2 billion ($46.06 million).

The US accounts for 98 percent of the North America remittances, reflecting the large Kenyan diaspora in the country and its status as the world’s foremost economy.

The dominance of the region — and in extension the US — as the largest source of diaspora dollar looks set to continue, with the CBK saying in November the US alone accounted for 67.3 percent of total remittances, equivalent to Sh24 billion ($215.4 million).

Total remittances during the month stood at Sh36.2 billion ($320.1 million).

There is also growing prominence of dollar inflows from Asia, especially Saudi Arabia, on the back of increasing migrant labour including domestic workers, doctors, university lecturers, consultants, bankers, engineers, nurses and hotel managers.

The higher diaspora inflows have however failed to stem the decline of the shilling, which is trading at an all-time low of 113 units to the greenback due to increased importer demand.

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