Kenyans living and working abroad sent home a record $4.94 billion (Sh637.3 billion) in the year ended December 31, 2024, shuttering Central Bank of Kenya’s forecast of Sh600 billion.
According to the weekly bulletin by the apex bank, remittance inflows reached an all-time high of 2024 compared to $4,19 million (Sh540.5 billion) in 2023, an increase of 18 per cent.
According to the data, the inflows were strong in December 2024 at $445.4 million (Sh57.5 billion) compared to $423.2 million (Sh54.5 billion) in November, an increase of 5.2 per cent.
The United States remains the largest source of remittances, contributing 51 per cent of total inflows in 2024.
“The growth in remittances continues to support Kenya’s current account and the stability of the exchange rate,” the CBK added.
The increased remittances played a significant role in bolstering the country’s foreign exchange reserves, which remained above the statutory requirement of maintaining at least four months of import cover.
As of January 16, 2025, reserves stood at $9,143 million (Sh1.184 trillion), equivalent to 4.7 months of import cover.
“This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover,” the bank confirmed.
Kenya is now earning more foreign exchange from diaspora remittances than each of its major exports – coffee, tea and horticulture – in spite of persistent criticism of a poor diaspora policy.
The growth is coming officially recorded remittance flows to low- and middle-income countries (LMICs) moderated in 2023, reaching an estimated $656 billion, according to the World Bank’s Migration and Development Brief.
Remittance flows to Sub-Saharan Africa reached $54 billion in 2023, a slight decrease of 0.3 per cent.
The global lender had projected remittances to LMICs to grow at a faster rate of 2.3 per cent in 2024, although this growth is uneven across regions.
It had pointed out that potential downside risks to the projections include weaker than expected economic growth in high-income migrant-hosting countries and volatility in oil prices and currency exchange rates.
World Bank ranks Kenya among Africa’s top three recipients of diaspora remittances behind Nigeria and Ghana.
Besides, liquidity in the money market remained adequate during the week ending January 16 supported by open-market operations.
Commercial banks’ excess reserves stood at Sh15.1 billion in relation to the 4.25 per cent cash reserves requirement (CRR).
The average interbank rate was 11.33 per cent on January 16 compared to 11.12 on January 9. During the week, the average number of interbank deals increased to 55 from 46 in the previous week, while the average value traded increased to Sh34.4 billion from Sh30.9 billion.
The Treasury bill auction of January 16 received bids totaling Sh18.9 billion against an advertised amount of Sh24. billion, representing a performance of 78.6 per cent.
Interest rate on the 91-day, 182 and 364-day Treasury bills continued to shrink, with the 91-day yielding an average of 9.56 per cent from a high of 15.9 per cent mid-last year.
Interest on the 182-day bill is currently averaging 10 per cent from a high of 16.7 per cent at the beginning of the current financial year.
Yields on the one year Treasury bill has declined to 11.3 per cent. During the Treasury bond auction of January 15, the reopened 15-year and 25-year fixed rate Treasury bonds received bids totaling Sh59 billion against an advertised amount of Sh30 billion, representing a performance of 196.7 per cent.
The bonds, which traded a record 19 per cent mid last year, are now trading at 15.68 per cent.
by VICTOR AMADALA
