Money from the diaspora plays a huge role in shaping Kenya’s economy. The last three years have enormously increased Kenya’s s remittance inflow, shaping Kenya’s economy. These remittances have boosted the Kenyan economy.
2021 and 2022 have registered an all-time high record on remittances to Kenya. In 2021 precisely, the inflow hit more than $3.5 billion, a record that Kenya had not recorded for almost two decades.
In 2022, the trend seemed to be the same as the remittance inflow increased. Up to September alone, money sent back home had hit $2.9 billion.
Chances are high that the total amount in remittances for 2022 will supersede that of the year 2021.
Kenya ranked high in diaspora remittance.
Recent statistics on diaspora remittance in African countries place Kenya in the top three in amounts received. At the top is Nigeria, followed by Ghana, and in the third position is Kenya.
This overall ranking and the fact that Kenya’s diaspora remittance has been increasing year on year has opened up programs to see that the diaspora potential is fully exploited.
This development program aims to work on matters such as curbing the current high cost of remittances, addressing the diaspora challenges, using mobile money to improve tourism, reducing brain drain, and creating a comprehensive data file for Kenya’s diaspora profiles.
Reason for this increase in remittance
- Life has become more expensive, and inflation.
Life has become expensive such that everyday life requires more amount of money than the amount one previously needed. The high living costs and inflation make it necessary for those abroad to extend financial support to those back home.
Since this economic challenge is everywhere, even those abroad feel the pinch. For them to be able to send money back home, they also have to adjust how they live.
To get enough to send money back home to family and friends, people abroad have had to cut down on expenses they can do without, like eating out. 46% of people have resorted to cooking from home.
This money sent back home not only plays a huge role in supporting the receiving individuals. However, it plays a crucial role in Kenya’s national economy.
How diaspora remittance has shaped our economy in the last decade
According to Ivan Kanyali, Regional Manager, East Africa, WorldRemit diaspora remittances have shaped our economy by enhancing the forex exchange market, driving social development, contributing to long-term investments and hastening globalization. Let us look at some of these factors.
- It has enhanced the Forex Exchange Market.
The forex exchange market facilitates the process through which remittances reach people back home. Money sent through different currencies has to be exchanged for Kenyan cash for the receiving individual to access. Every exchange earns Kenya a certain amount of money.
The increased transactions of remittances over the last ten years show that Kenya’s revenue in the section has dramatically increased. In 2021, the gain on remittances was Ksh. 449 billion.
Remittance revenue was more than other things that brought Kenya revenue like tourism and tea. In 2021, tourism and tea revenue combined to bring in Ksh. 282 billion.
Kenya already counts remittance revenue as among Kenya’s high foreign revenue generators.
- People mainly use remittances for needs that drive social development.
Remittances have boosted the economy by driving social development. Most of the time, people send money back for use for education and medical expenses. People receiving this money use it for medical purposes, to pay fees, and to buy education supplies. A healthy nation is a wealthy nation. When people have received the medical attention they need and they are healthy, they can focus on nation-building activities. Also, when people can access education services efficiently, it impacts the long-term development of the country.
- Contributes to long-term investments
Though several Kenyans abroad send money back home to be used for basic needs, the last decade has seen a tremendous increase in remittances explicitly being used for investments. This move has led bodies such as the East African Community to support their venture by opening channels like the diaspora desks.
People abroad send money to be invested in real estate, agriculture and businesses. Apart from contributing to the country’s economic growth, these investments contribute to developing skills in the local job market.
These remittances have illustrated to many young Kenyans that the world is a global village and that looking for greener pastures does not only need to happen within the Kenyan borders, but that one can go to other countries and make a fortune.
Youths are willing to relocate overseas where they can access opportunities to acquire skills they may not gain back home.
The aim to either search for greener pastures or to advance studies abroad has led to a massive community of Kenyans in various countries abroad. As per the 2020 statistics, the diaspora community had reached more than half a million, with the significant destination being the United States.
Many stay for months and even years without physically seeing their loved ones back home, yet the connection is never lost and only grows stronger. The availability of accessible, reliable, and safe digital means of sending money back to their loved ones is one way that makes life easier for them.
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