Kenyans in the diaspora reduced remittances by Sh2.3 billion in January 2025, totaling $427.4 million, as the US remains the largest remittance source. The stable shilling at 129 poses challenges for expatriates in deciding on transfers. Year-on-year, remittances show growth despite the monthly decrease, with a 3.6% increase in January over the previous year.
In January 2025, remittances from Kenyans in the diaspora decreased by Sh2.3 billion, as reported by the Central Bank of Kenya (CBK). This decline brought total remittance inflows down to $427.4 million (equivalent to Sh55.2 billion) compared to $445.4 million (Sh57.6 billion) in December 2024. The figures reflect evolving economic decisions among Kenyan expatriates amid fluctuating exchange rates.
Despite this decrease, January 2025’s inflow still represents a 3.6 percent increase from $412.4 million (Sh53.3 billion) during the same month in the previous year. Over the previous 12 months, total remittances grew by 16.6 percent to $4,961 million (Sh641.1 billion) compared to $4,253 million (Sh549.6 billion) in 2024. This growth underscores the resilience of remittances despite short-term fluctuations.
The United States continues to be the foremost source of remittances to Kenya, contributing 53.2 percent of the total inflows. Although the Central Bank did not specify causes for the decline, the Kenyan shilling’s exchange rate has shown relative stability at an average of 129, making it challenging for diaspora Kenyans to determine whether to send additional funds home or not.
According to Western Union’s Global Money Transfer Index, 67 percent of Africans abroad tend to increase remittances when their local currency depreciates, while 65 percent of recipients assert that currency value fluctuations impact the amount they receive. A stable shilling against the dollar means diaspora Kenyans may find sending money less beneficial than previously when the local currency was depreciating.
The CBK reported that, as of the end of January 2025, the shilling was quoted at 129.22, maintaining this exchange rate for six months. When compared to last year’s average of 160, the shilling has strengthened, yielding a 19 percent gain against the dollar. As a result, the actual value of remittances sent home has diminished, exemplified by the fact that $100 sent in January is worth 19 percent less than the previous year, highlighting the impact of currency fluctuations on remittances.
In conclusion, January 2025 saw a decline of Sh2.3 billion in remittances sent home by Kenyans in the diaspora, primarily influenced by the stable exchange rate of the shilling against the dollar. While the year-on-year inflow shows an increase, the current economic environment has prompted diaspora Kenyans to assess whether to send more funds home. The findings indicate the complexities of currency values significantly affecting remittance decisions.
Original Source: eastleighvoice.co.ke
