Diaspora defy virus to send home Sh331b
Tuesday, January 5th, 2021
- A staggering performance by a sector that most policy makers and analysts had predicted would decline
- World Bank had projected that remittance flows to low and middle-income countries were expected to drop by around 20 per cent to $445 billion (Sh47.6 trillion), from $554 billion (Sh59.2 trillion) in 2019.
Kenyans abroad sent home a record Sh331 billion ($3.04billion) in 2020, which is a 9 per cent increase compared to 2019, in the midst of a ravaging coronavirus pandemic.
Central Bank of Kenya (CBK) data shows that Diaspora remittances defied Covid-19 shocks to increase by Sh27 billion from Sh304 billion in the 12 months to November 2019 compared to Sh331 billion, same period last year.
“Kenyans in the Diaspora defied Covid-19 shocks to send in the 12 months to November 2020 totaled $3.045 billion (Sh331.9 billion) , compared to $2.790 billion (Sh304.1 billion) in the 12 months to November 2019,” said CBK.
This despite World Bank earlier projection that remittances will fall 23 per cent, by braving the shocks, the Diaspora remained the lone standing pillar as tourism fell while exports collapsed drastically.
Remittances came to the rescue of families whose incomes had dried up due to job losses.
“What happened is that developed nations where most Kenyans are such as the US and UK have social support systems such as cash transfers that cushioned them,” said Nairobi based economist and businessman Robert Shaw.
Shaw said that Kenyans abroad saw themselves as crucial in helping their loved ones through the pandemic.
The pandemic rendered an estimated 5 million Kenyans jobless according to a recent survey by the Kenya Private Sector Alliance (Kepsa).
Several companies went into receivership while many downsized. Some were completely shut. Small businesses were the most affected as consumers cut back on discretionary spending.
During that period however, Kenyans in the Middle East countries, Asia and Eastern Europe were forced to return home after their jobs ended, with some of them seeking government help to come home.
Nealry 25 percent of the diaspora remittances came from the US, followed by Britain and other countries which tend to give visas to highly skilled immigrants thus partly explaining the resilience diaspora inflows.
The resilience of remittances have led the government mull over a diaspora investment vehicles, such as bonds, to help in infrastructure projects in the country.
Kenya has been ranked third in World Bank Africa diaspora remittance inflows. Kenya is the only country in the Sub-Saharan Africa where remittance inflows have so far been countercyclical to the Covid-19 pandemic disruptions.
The World however warns that 2021 may see remittances fall. Nigeria is Africa’s largest recipient of remittances followed by Ghana then Kenya and Senegal.
South Sudan however leads Africa when it comes remittances inflows as a percentage of GDP at 35 per cent, followed by Lesotho (20.6 per cent), the Gambia (14.9 per cent), then Cape Verde (12.0 per cent), and Comoros (10.8 per cent).
Other key recipients of remittances include El Salvador, Eritrea, Ethiopia, Gambia, Ghana, Guatemala, Guinea, Haiti, Iraq, Jordan India, Indonesia, Honduras and Kenya.
The inflows helped to support the shilling which analysts said could have faced even more vicious shocks had remittances dropped.