Kenya and Money Remittances

According to the World Bank, more than 215 million people live outside their countries of birth, and this number is expected to rise steadily as more and more people move to other nations in search of better lives. According to Kenya’s Ministry of Foreign Affairs, there were more than 3 million Kenyans living and working abroad in 2011, and 3 years later, this number has definitely increased by a huge margin. Due this, the amount of remittances sent to the country has continued to increase, and I can confidently say that much should be expected in the near future.

photo credit: klndonnelly cc
Photo credit: klndonnelly cc

Most of the remittances coming to the country are from North America, Middle East and Europe. North America records the highest amount of remittances, followed by the Middle East. The interesting thing about the report is that the Middle East has slightly overtaken Europe in terms of remittances, which may be attributed to the economic tribulations that Europe has been facing over the last decade. Perhaps another good reason as to why there is a huge number of Kenyans working in the Middle East is because there is huge demand for labor in that part of the world, and their immigration rules and regulations favor migrants. It is much easier to get a visa and a work permit in the Middle East compared to Europe, which further explains why remittances from that part of the world have had an upward trend in the last decade.

Money transfer plays a very significant role, because it provides migrants with an easier way to send money to their friends, family and relatives back home. As a matter of fact, if money transfer did not exist, people would be forced to make frequent trips just to bring money back home. This thus highlights the very vital role played by money remittances, because the transport costs involved in frequent travels plus the time wasted during the trip, would cause a huge dent on the productivity of the migrants in their host countries.

Remittances in Kenya increased by 31.4% ($1.17 billion) in 2012 compared to the ($891.1 million) received in 2011. In 2013, remittance inflows to Kenya were ($1.29 billion) which is a 10.3% increase compared to 2012’s remittances.

The Central Bank of Kenya (CBK) attributed this increase to:

  • An increase in money remittance channels – Since 2008, the number of money remittance channels to Kenya increased. Multiple agencies started cropping up, which would provide a variety of money sending platforms namely: Wire transfer, Bank draft, Internet money transfer and money orders. With this variety, migrants are able to choose their most suitable money remittance method, thus contributing to an increase in money transfers to the country.
  • Increase in number of Kenyans working abroad – The number of Kenyan migrants is at an all-time high, which has automatically contributed to a surge in money transfers to the country. Due to improved education systems, there are a huge number of graduates who are not able to find jobs in the country because the demand for jobs exceeds the supply. The mass exodus of Kenyans looking for jobs abroad has resulted in people working in high-risk places such Afghanistan. There is a huge number of Kenyans working at the US Army Bases in Afghanistan, and because they are well compensated, they do not mind the taking the risk. This therefore paints a good picture of the extent that Kenyans are willing to go, just to earn a decent living.
  • Reduced remittance costs – Perhaps the major reason why there is an increasing trend in terms of money remittances, is due to reduced remittance costs. The growth of money remittance channels has increased competition in the industry, which has thus pulled down the costs involved in money transfer. In the past, people preferred to keep their savings with them until their work permits expired and they had to come back to the country. However, due to the reduced remittance costs, people can now send money back home as frequent as they desire.
  • Increased efficiency in money remittance channels- people are more confident that their money will reach the recipients safely, because there have been very minimal cases of loss of money during transit in the recent past. This has thus boosted people’s confidence in money transfer platforms, thus contributing to the increase in money remittances. The growth of money transfer service providers has also contributed to this efficiency, because users will only go for the best. With each service provider striving to be the best in the market, we can definitely hope for an even brighter future in money transfer.

How Have Money Remittances Contributed To Kenya’s Economic Growth and Development?

According to a UN report in 2012, money remittances can help uplift lives in developing countries, if the money is used constructively. Latest statistics point out that remittances are the 4th largest source of foreign exchange for Kenya. This therefore means that money remittances are in the same league as Kenya’s other foreign exchange earners, namely: Tea exports, coffee exports and Tourism. An increase in foreign exchange strengthens the local currency, which is very important because a weak currency will inflate the import value resulting in high importation costs.

How is the money used to spur economic growth?

Most of the money is sent to family and relatives, and invested in the Real estate sector. This explains the current boom in the real estate sector in Kenya.

Investment in Capital Markets and government bonds-The government gets a lot of money through sale of government bonds, and these funds are used for infrastructural development in the country.

Latest Trends in Money remittances in Kenya

Kenya is quite a unique country when it comes to money remittances. Its communications technology structure, coupled with the dynamics of its society and culture, has directed Kenya to becoming the largest mobile money transfer user in the world.

Merchants and middlemen have also started cropping up, and they are able to conduct direct withdrawals from online accounts to be directly deposited to banks, mobile phone accounts, as well as cash pickup. This has thus made it very easy for migrants to send money, and for the recipients to access the money.

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“Kenya and Money Remittances” is written by Sidney Njuguna M, one of Ria Exchange’s Featured World Writers. Sidney is a Bachelor’s Degree holder in Commerce, and is a full-time professional writer. He is an avid soccer fan and loves collecting socks. You can link up with him on Skype at sid.mucheru, or email him at