Expatriates living and working in Kenya sent a record Sh86.99 billion back to their home countries in the year ending December 2023, data has shown, underscoring the improving wealth of foreigners in the country.
The amount – equivalent to Sh7.25 billion monthly – represents a 24.3 percent increase from the Sh69.96 billion sent home by expatriates the previous year, newly published Central Bank of Kenya data showed.
The Central Bank of Kenya said most of the money was transferred to countries in the East African region through digital channels, as well as through the 21 remittance service providers across the country.
“Digital channels are effective and enable quick transfers to beneficiaries’ bank accounts and e-wallets,” the central bank said in its banking sector supervision report published last week.
The largest outflows from Kenya were recorded in March (Sh8.32 billion) followed by December (Sh8.21 billion) while the lowest amount of Sh5.83 billion was remitted in February of the same year.
The increased outflows came as the Kenyan shilling began to lose value against global currencies such as the dollar and those of its neighbours including the Tanzanian shilling and Ugandan shilling – boosting the salary fortunes of most expatriates because it made it easier for them to settle their expenses against the backdrop of slowing inflation.
For example, the Kenyan shilling lost a quarter of its value against the US dollar last year, pushing up the wages of expatriates who earn in dollars, as shown in Mercer’s 2023 Cost of Living ranking, which showed Nairobi improving 13 places to become the most expensive city at 173rd place compared to 160th the previous year.
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.
Outflows from Kenya grew by 24.3 percent in 2023, faster than inflows, which grew by 20.5 percent.
But the Sh86.99 billion outflow may be conservative, given a recent survey by the Kenya Financial Sector Deepening Project, which showed a lot of informal cross-border remittances, especially within the East African Community.
The International Finance Corporation, through its 2022 Kenya Cross-Border Payments Survey, said that 70 percent of remittances between Kenya and East African Community countries such as Tanzania and Uganda are informal.
According to the FSD, the main feature of the region is the proliferation of e-wallets and the prevalence of multiple SIM cards carried by people who travel in the region or work in other countries.
“The ownership of multiple SIM cards was mostly for cross-border transfer purposes,” the Financial Services Department said. “People with multiple SIM cards had different arrangements to add e-value to their mobile wallets, including formal methods such as bank-to-wallet transfers, recharging through local agents, or receiving funds.”
The study added that informal methods also include the use of informal agents or exchanging currencies at the border in exchange for credit recharges.
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 making transactions.
The Anti-Money Laundering Department said that interviews with informal service providers indicated that there are individuals who deliberately seek to deal with informal remittance service providers to hide their transactions from the authorities for tax or illegal purposes.
“They typically send larger volumes, are price insensitive, and look for cash-based services to move money across borders on their behalf,” FSD said in the study.
The increasing remittances from Kenya also indicate that more foreigners are engaged in profitable economic activities. This may also indicate an improvement in their incomes.
Conversely, Kenyans are flocking out of the country to places like the United Kingdom, the United States, Canada and Saudi Arabia in search of better jobs and wages. The Kenyan diaspora was estimated to number four million at the end of last year, according to data from the Ministry of Foreign Affairs.
Kenyans living and working abroad still send home much more money than their counterparts working in Kenya.
Data from the Central Bank of Kenya showed that remittances to the country reached Sh362.91 billion last year, 4.2 times the amount sent home by expatriates working in the country. Remittances to Kenya stood at Sh301.07 billion a year ago.
Last month, the Central Bank of Kuwait revised its forecast for annual remittance growth, raising it from five percent to 12 percent, driven by performance in the first four months of the year.
According to the World Migration Report 2022, the estimated number of international migrants has increased over the past 50 years. In 2020, nearly 281 million people were living in a country other than their country of birth, compared to 153 million in 1990 and 84 million in 1970.