World Bank says diaspora remittances to Kenya to grow at slow rate

The amount of money sent into the country by Kenyans working abroad is set to grow at a slower rate to reach Sh185 billion in 2017.

The World Bank projects that diaspora remittances will grow 4 per cent by end of this year, which will be the slowest annual growth in more than five years. However, total receipts are expected to touch an all-time high.

The projected growth for 2017 is in comparison to 10 per cent in 2016. Over the last five years, remittances have posted an annual growth rate of between 8 and 10 per cent. In 2012, inflows grew by 31 per cent.

Remittances by Kenyans in the diaspora, which stood at Sh177 billion by end of 2016, have grown to outgrow other sources of foreign exchange earnings including tea, horticulture and tourism.

However, remittances to other African countries will perform better. The World Bank expects inflows to Sub Sahara Africa to grow by an average 10 per cent, with Nigeria leading the pack with 11.1 per cent growth.

“Buoyed by improved economic activity in high-income Organisation for Economic Co-operation and Development (OECD) countries, remittances to Sub-Saharan Africa are projected to grow by a robust 10 per cent to $38 billion this year. The region’s major remittance receiving countries, Nigeria, Senegal and Ghana, are all set for growth,” the World Bank said in a report on migration and remittances.

“The region’s major remittance-receiving countries are all projected to have remittance growth in 2017: Nigeria is expected to have 11.1 percent growth, Ghana 4.3 per cent, and Kenya 4.1 per cent.”

In the seven months to July this year, remittances to Kenya grew five per cent compared to a similar period in 2016. According to data by the Central Bank, Kenyans working abroad sent home Sh106 billion ($1.03 billion) between January and July this year, compared to Sh101 billion ($987 million) over the first seven months of 2017.

Inflows to Kenya are largely from Western Europe and North America, with the United States and Canada accounting for more than half of remittances to Kenya while Europe accounted for 29 per cent.

Cost of sending money has been the biggest hindrance. According to the World Bank, Sub Saharan region has always recorded the highest remittance costs in the world.

North America, which accounts for the biggest chunk of money sent from abroad, currently charge an average of 7.1 per cent from the USA and 9.5 per cent of the sum according to World Bank’s Remittances prices worldwide.