Kenyans abroad sent home Sh5.8 billion less in February

Kenyans living and working abroad sent home Sh5.8 billion less in February compared to the previous month, as the strengthening of the local currency reduced the value of remittances.

Data from the Central Bank of Kenya (CBK) shows that remittance inflows in February amounted to $382.2 million (Sh49.5 billion), marking a 10.6 per cent decline from January’s $427.4 million (Sh55.3 billion).

The figure also represents a slight one percent drop from the $385.9 million (Sh50 billion) recorded in February last year.

“The cumulative inflows for the 12 months to February 2025 increased by 14.5 percent to $4,956 million (Sh641.8 billion) compared to $4,330 million (Sh560.7 billion) in a similar period in 2024,” CBK stated in its weekly bulletin.

The United States remained the largest source of remittances, accounting for 53 percent of the total inflows during the month under review.

The decline in remittances is likely linked to the appreciation of the Kenyan shilling against the US dollar, which made it less necessary for Kenyans abroad to send higher amounts.

According to Western Union’s Global Money Transfer Index, 67 percent of Africans abroad send more money when their home currency weakens, while 65 percent of recipients agree that a depreciating local currency results in higher earnings for them.

Over the past seven months leading to February, the shilling has maintained stability against the US dollar, averaging an exchange rate of 129.

In February alone, the local currency traded at an average of 129.30. This represents a significant gain from the historic low of 160, reflecting a 31-unit improvement, or a 19 per cent strengthening.

While a stronger shilling generally benefits the economy by lowering importation costs and easing inflation, it has a downside for remittance recipients.

A stronger local currency means that the money sent from abroad translates to lower amounts once converted.

However, the appreciation of the shilling is expected to provide relief to consumers by reducing the cost of imported goods and consequently easing the general cost of living.

It is also projected to boost the country’s forex reserves, as importers require dollars for transactions.

Additionally, the strengthened shilling is likely to reduce the debt burden since a significant portion of Kenya’s debt is dollar-denominated.