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Remittance by Kenyan expatriates continued on a growth trajectory and hit a record high of USD 4.19 billion in 2023, significantly boosting the country’s current account balance amid falling export revenue. Data from the Central Bank of Kenya (CBK) shows that diaspora remittances in the 12 months to December 2023 increased by 4 percent from the USD 4.028 billion at current exchange rates recorded in a similar period in 2022.
The rise in remittances was largely driven by growth in diaspora receipts from within Africa, which increased by more than 50 percent year-on-year in the 12 months to November 2023.
The United States remained the largest source of diaspora remittances last year, accounting for 56 percent of the remittances, a one percent increase from the USD 2.33 billion posted in 2022. Other top sources of remittances were Canada, the United Kingdom, Germany, Saudi Arabia, the United Arab Emirates, and Australia.
In its latest country report for Kenya, the International Monetary Fund said this sustained growth of diaspora remittances, along with tourism receipts, was crucial to reducing the current account deficit last year as earnings from exports reduced estimates that the country’s current account deficit slimmed to 4.1 percent of gross domestic product (GDP) in 2023, from the 5.2 percent recorded in 2022, a significant improvement in a tight economic environment characterised by a drop in demand for Kenyan exports.
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Exports such as coffee, tea, and horticulture have traditionally been the largest earners of foreign exchange for Kenya, but diaspora remittances have lately emerged to be the most prominent, bringing in more than the three exports combined. The traditional exports of tea, coffee, and horticulture underperformed in line with subdued global demand.
