Diaspora cash hits Sh24b despite virus

The flow of money from Kenyans living and working abroad increased in March to $228.9 million (Sh24.3 billion), up from $218.8 million (Sh23.2 billion) in February.

But while overall remittances increased, the 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.

According to the latest data from the Central Bank of Kenya (CBK), the cumulative inflows in the 12 months to March totalled $2,838 million (Sh300.2 billion) compared to $2,722 million (Sh288.5) in the same period last year, reflecting growth of 4.3 per cent.

“There was no decline, so far, in remittances from the largest sources such as the US and UK,” said CBK in its weekly bulletin.

However, the tide of money from North America and Europe will not last forever as the coronavirus pandemic hits these regions hard.

At least 26 million workers have filed for unemployment in the United States following the restriction of human activities across the country in an effort to curb the spread of the virus.

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.

“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 recipient 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.