Remittances from Kenyans abroad declined by Sh2.3 billion in January 2025, totaling $427.4 million. The US remains the largest source, making up 53.2% of inflows. The stable exchange rate of the shilling at 129 complicates remittance decisions. Despite a year-on-year increase, the current trends reflect economic challenges for the diaspora community’s support to Kenya.
In January, Kenyans living abroad sent home Sh2.3 billion less than they did in December, as reported by the Central Bank of Kenya (CBK). The total remittance inflows reached $427.4 million (approximately Sh55.2 billion) for the month, a decrease from $445.4 million (around Sh57.6 billion) in December 2024. Despite this drop, inflows, when compared to January of the previous year, exhibited a 3.6% increase from $412.4 million (Sh53.3 billion).
The US continues to be the largest contributor of remittances, accounting for 53.2% of the inflows during the reported period. Although the CBK did not clarify the reasons behind the decline in remittances, the consistent exchange rate of the Kenyan shilling, averaging 129, complicates the decision-making process for diaspora Kenyans regarding sending funds to their home country. A stable currency may limit their motivation to transfer more money back home.
The situation indicates a pattern where diaspora communities tend to send more money when local currency depreciation occurs. According to Western Union’s Global Money Transfer Index, approximately 67% of Africans abroad increase their remittance amounts during times of currency value decline in their home countries. This trend illustrates the challenges faced by diaspora Kenyans, as they navigate currency exchange fluctuations while determining remittance amounts.
The shilling’s average exchange rate of 129.22 has remained stable for the past six months. In contrast to the same time last year when the shilling traded at approximately 160, the current strength represents a 19% gain. Consequently, the purchasing power of funds sent by diaspora Kenyans has diminished, as demonstrated by the fact that sending $100 home in January now yields 19% less than it did one year ago.
Overall, the decrease in remittances for January reflects economic conditions affecting Kenyans abroad, alongside the complexities posed by the current exchange rate. As remittances remain crucial for many households, ongoing analysis of these trends is vital to understand their implications on the Kenyan economy.
In conclusion, Kenyans in the diaspora sent Sh2.3 billion less in January 2025 compared to December 2024, totaling $427.4 million in remittances. The US continues to be the leading source of these funds, accounting for over half of the total. Despite a year-on-year increase in inflows, the stable exchange rate of the Kenyan shilling presents challenges for diaspora Kenyans, influencing their remittance decisions and ultimately impacting economic support back home.
Original Source: eastleighvoice.co.ke
