Saudi Arabia surpasses US as the biggest source of Kenya’s diaspora remittance
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Saudi Arabia posts the fastest growth in Kenya's diaspora remittance leapfrogging those in the United States (US)
Saudi Arabia posts the fastest growth in Kenya’s diaspora remittance leapfrogging those in the United States (US).
Kenyans living and working in Saudi Arabia have become the biggest drivers of growth in cash wired back home, surpassing those in the United States.
This underscores the continuing impact of high inflationary pressures on household earnings in the largest economy in the world.
According to the most recent official data, remittances from the Middle East’s economic superpower accounted for about two-thirds of the surge in diaspora inflows during the first eight months of the year.
This came in a period when total inflows from Kenyans abroad grew at their softest since 2010, dragged by a marginal fall from the US, which still controlled the lion’s share of the remittances.
Overall inflows from the diaspora increased a modest 3.43 percent, or $91.79 million (Sh13.61 billion, where $1 is equivalent to Sh148), in the review period to nearly $2.77 billion (Sh409.41 billion).
The slowdown largely mirrors the impact of lingering cost of living pressures — driven by energy, food, and rent prices — which have squeezed the disposable income of households in the US.
However, remittances from Saudi Arabia have continued to grow at the fastest pace amongst top global sources, according to the data tracked by the Central Bank of Kenya from formal sources such as banks and money transfer platforms.
Kenyans in the Middle East’s largest economy sent home $57.16 million (Sh8.46 billion), or 30.28 percent, more in the eight months through August to $245.95 million (Sh36.40 billion) compared with the flows in the same period last year.
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According to the data, Saudi Arabia, which has surpassed the UK to occupy the second-largest source spot, was responsible for 62.27 percent of the $91.79 million increase in total flows.
Despite controlling 56.18 percent of all remittances during the review period, the US saw a 0.72 percent decline to $1.55 billion (Sh229.99 billion), with Kenyans living in the country sending Sh1.66 billion less home.
Inflation in the US rose to 3.7 percent in August from 3.2 percent a month earlier, marking the third consecutive month annualized cost of living measure increased after it had hit a two-year low.
Diaspora remittances have since 2015 remained the largest source of foreign cash flows into Kenya ahead of tourists, foreign direct investments (FDIs), and leading agricultural exports such as horticulture and tea.
Kenyans living abroad last year, for example, wired $4.03 billion back home compared with Sh268. 09 billion receipts from tourists, Sh163.12 billion earnings from tea exports, and an estimated $759 million (about Sh111.93 billion) foreign direct investments.
Kenya Diaspora Remittances Survey Report, commissioned by the CBK, suggested in December 2021 that the largest share of the remittances goes into supporting families at home to buy food and household goods.
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