Diaspora inflows hit Sh109bn mark

PHOTO | FILE The Central Bank of Kenya (CBK). Central Bank data indicates that Kenyans living abroad sent Sh109.76 billion ($1.27 billion) back home from January to October 2013 compared to Sh97.8 billion ($1.13 billion) last year.  NATION MEDIA GROUP

In Summary

• Remittances are key source of foreign exchange
• Central Bank data indicates that Kenyans living abroad sent Sh109.76 billion ($1.27 billion)

By MUTHOKI MUMO
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Diaspora remittances to Kenya rose by 11.7 per cent up in the first the first 10 months of 2013.

Central Bank data indicates that Kenyans living abroad sent Sh109.76 billion ($1.27 billion) back home from January to October compared to Sh97.8 billion ($1.13 billion) last year.

Although the figures are an all-time high, they also reflect a slackening growth following the highs of the last two years.

Despite this performance, the Central Bank said that Diaspora remittance has and will continue to remain unshaken by global economic challenges.

"The strong performance underscores the resilience of remittances in spite of the sluggish economic performance in source markets,” writes the Central Bank.

In October 2011 and October 2012, Kenya’s annual Diaspora remittance growth rates was more than 30 per cent.

FINANCIAL MELTDOWN

In 2009, diaspora remittances contracted 5.67 per cent while in 2010 they grew 6.08 per cent, as an immediate consequence of the 2007-2008 financial meltdown.

Europe and the United States are key sources of remittances into Kenya. North America accounted for 45 per cent while Europe’s share was 28 per cent by October.

"North America’s remittance is a reflection of the large number of Kenyans with gainful income,” the Central Bank said.

The remittances are increasingly important to Kenya as a key source of foreign exchange.

To better monitor it, the Central Bank has been reviewing its data collection.

Some economists urge that trend analysis based on Central Bank data should be taken with a pinch of salt.

“Some of these statistics have been fairly erratic because Central Bank has been refining how it collects data,” said economist Robert Shaw. But there was consensus that Diaspora remittances to Africa were on the rise.

DEVELOPMENT ASSISTANCE

In some cases, as in 2013, they outstrip overseas development assistance.

Local firms have focused on this. Safaricom, Equity Bank and the Nation Media Group have all developed money transfer services specifically for the Diaspora.

The World Bank, in its October 2013 Send Money Africa report, noted that the cost of sending money to Africa was close to three percentage points higher than the global average.