A record $378.1 million (Sh54.6 billion) in remittances from Kenyans working and residing abroad were made in July, primarily to help the beneficiaries get through difficult circumstances at home.
This represents an increase of 18.4% over the $319.4 million (Sh46.1 billion) recorded in July 2022, and it marks the second consecutive month that Kenya’s foreign inflows have increased.
The weaker shilling has allowed those in the diaspora to profit from it, which has contributed to the rise in remittances.
In light of the weak shilling, Kenyans in the diaspora are rushing to use a solid dollar to their advantage, which is increasing the spending power of their local beneficiaries and sparking an increase in remittances.
Concerns about inflation in major economies have also continued to subside, releasing pressure on Kenyans’ overseas spending.
Comparing the 12 months ending in July to the same time in 2022, cumulative inflows increased by 2% to $4,076 million (Sh588.4 billion), up from $3,995 million (Sh576.7 billion).
The current account and exchange rate stability are both supported by the substantial inflows of remittances. According to the Central Bank of Kenya, the US continued to be the most significant source of remittances to Kenya, accounting for 55% in July 2023.
In its first Global Money Transfer Index, Western Union predicted that the decreasing shilling would be a significant factor in boosting inflows.
The shilling has lost value recently when compared to other major currencies, and as of Monday morning, it was officially trading at Sh144.35 versus the dollar. However, Shilling is currently trading at just around Sh150 to the dollar on the open market.
More people are turning to relatives abroad for financial assistance due to economic difficulties like growing living prices and recipients’ increasing financial demands to cover college expenses.
Although the primary goal of remittances has been defined as providing support for families, consumers report that transfers also play a significant part in long-term financial planning.
Many Kenyans in the diaspora, according to Western Union, are keeping a close check on how their local currency is performing at home and trying to take advantage of the chance.
Even if the outlook for the world economy is still uncertain, inflows are increasing, which reflects ongoing worries about the viability of the financial system in advanced economies.
According to a survey by World Remit, even though the US, the primary source of remittances, has seen significant inflation, Kenyans working abroad are still expected to make sacrifices to support family members back home.
The unprecedented remittances show how Kenyans residing abroad are bucking the trend of rising living expenses for their family.
In conclusion, money sent home by citizens who work overseas is essential for sustaining families, communities, and economies. These remittances to Kenya have helped many people make ends meet by paying for necessities like shelter, food, and healthcare. Beyond helping specific families, remittances also promote economic growth by boosting consumer spending and investing money in nearby firms.
