Expatriates living and working in Kenya sent a record Sh86.99 billion back to their home countries in the year ended December 2023, data shows, underlining improving fortunes for foreigners in the country.
Newly published Central Bank of Kenya (CBK) data shows that the amount—an equivalent of Sh7.25 billion a month—represents a 24.3 percent rise from Sh69.96 billion the expats remitted to their home countries in the preceding year.
CBK said most of the money was wired to countries within the East African region through digital channels, as well as through the 21 money remittance providers spread across the country.
“Digital channels are efficient and have enabled prompt transfers to recipient’s bank accounts and mobile wallets,” said CBK in the banking sector’s supervision report published last week.
The biggest outflows from Kenya were recorded in March (Sh8.32 billion) followed by December (Sh8.21 billion) while the lowest amount was Sh5.83 billion that was wired in February of the same year.
The increased outflows came when the Kenya shilling was shedding value against global currencies like the dollar and that of its neighbours including the Tanzania shilling and Uganda shilling—lifting the salary fortunes of most expatriates because it made it easier for them to settle their expenses on the back of cooling inflation.
Against the US dollar, the shilling, for instance, shed a quarter of its value last year, translating to a pay rise for expats earning in dollars as captured by the Mercer Cost of Living ranking for 2023 that showed that Nairobi had improved 13 places to become the 173rd most expensive city compared to the previous year’s 160th.
Mercer’s ranking is based on changes in the comparative dollar cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
The 24.3 percent growth in outflows from Kenya in 2023 was faster than the pace of growth for inflows which was recorded at 20.5 percent.
The Sh86.99 billion outflows may, however, be conservative, given a recent Financial Sector Deepening (FSD) Kenya survey that showed there are a lot of cross-border informal remittances, especially within the East African Community (EAC).
FSD, through the 2022 Kenya cross-border payments survey said 70 percent of remittances between Kenya and EAC countries such as Tanzania and Uganda are informal.
According to FSD, a key characteristic of the region is the ubiquity of mobile wallets and the prevalence of multiple SIM cards held by people that are either travelling in the region or working in other countries.
“Multiple SIM card ownership was mostly for purposes of conducting cross-border transfer. People with multiple SIM cards had various arrangements for adding e-value to their mobile wallets, including formal methods such as bank-to-wallet transfers, topping up through local agents, or receiving funds,” said FSD.
The survey added that informal methods also included the use of informal agents or exchanging currency at the border for a top-up.
Mobile money wallets like M-Pesa support transfers to bank accounts while banks also support bank-to-mobile money transactions, giving senders and recipients flexibility when transacting.
FSD said interviews with informal service providers suggested that there are people who deliberately seek out informal remittance providers to conceal their transactions from authorities for tax or illicit purposes.
“They are typically sending larger volumes, are price insensitive, and seek out cash-based services to carry the cash across the border on their behalf,” said FSD in the study.
The increased remittances from Kenya also point to a growing population of foreigners engaged in gainful economic activities. It could also suggest their earnings are getting better.
On the reverse, Kenyans have been flocking out of the country to places such as the UK, US, Canada, and Saudi Arabia in search of jobs and better pay. The number of Kenyans in the diaspora was estimated to be four million at the end of last year, according to data from the Ministry of Foreign Affairs.
Kenyans living and working abroad are still sending home much more than their counterparts working in Kenya.
CBK data showed remittances into the country hit Sh362.91 billion last year— an equivalent of 4.2 times the money that expats working in the country send to their mother countries. Remittances into Kenya were Sh301.07 billion a year earlier.
Last month, CBK revised its annual growth forecast for diaspora remittances, increasing it from five percent to 12 percent, driven by the performance in the first four months of the year.
According to the 2022 World Migration Report, the estimated number of international migrants has increased over the past 50 years. In 2020, almost 281 million people lived in a country other than their country of birth as compared to about 153 million in 1990, and 84 million in 1970.
