Remittances, in this case taking the form of money that migrant workers send back to their families in their origin countries, have a huge impact on a given countries development, helping to alleviate poverty. Particularly in the Middle East and Africa Region, remittances are a crucial source of income for developing nations, despite some predictions that remittances to the region are projected to decline in the coming year.
The Central Bank of Kenya (CBK) has recently announced the release of additional data on remittances, showing the amounts received from individual countries. Since 2007 CBK publishes monthly data on remittances grouped into three broad regions; North America, Europe, and the Rest of the World. In addition to this broad grouping, CBK has now introduced a detailed breakdown of the remittances by individual countries from which they were sent. The new detailed data start in February 2019 and are available on the remittances page on CBK’s website.
Remittance inflows continue to provide a stable source of foreign exchange for Kenya and a key support for many households, totalling $3,094million in 2020. Remittances in March 2021 amounted to $290.8 million, compared to $228.8 million in March 2020, an increase of 27.1 per cent. The US remains the largest source of these inflows, accounting for 55.9 per cent of remittances in March 2021. The other top source countries were: UK (11.2 per cent), Saudi Arabia (4 per cent), Canada (2.9 per cent), and Australia (2.9 per cent).
In terms of remittances and fintech, it is clear that they are growing in the MEA region. For instance, it is important to note that 85 per cent of the fintech firms in Middle East and North Africa (MENA) region operate in the payments, transfer and remittances sectors. In the UAE, expatriates form the majority of the population – coupled with being home to Dubai and Abu Dhabi hubs, known for their growing fintech and wider tech ecosystems.
Another example is Kenya itself – both as a source of immigrants but also attracting talent due to its growing fintech and tech ecosystem. Notably Nairobi, the capital and largest city of Kenya, is also the hub for East Africa. Nairobi, as well as Johannesburg and Cape Town of South Africa and Lagos in Nigeria, in addition to Cairo in Egypt, Kampala in Rwanda and Accra in Ghana, are often referenced and known as key fintech hubs in Africa. With Kenya, their fintech strengths lie in payments, remittances, bank and lending technologies. Nevertheless, mobile money and lending platforms dominate Kenya’s fintech industry both in terms of subscription numbers and financial performance.
Remittances are important for the countries that receive them, as they play a large part in the country’s gross domestic product (GDP). An example of a MEA country that relies heavily on remittances is Egypt and its 100 million population. Despite overall being relatively more affluent than much of Africa, many Egyptians do go overseas. In 2019, Egypt received more than $26billion in remittances – many Egyptian workers go to the GCC, as well as Jordan – to name a few.
CBK Remittances Survey
The importance of remittances has revealed a need for more information that would support policy decisions in Kenya. In this regard, in collaboration with the Kenya National Bureau of Statistics and the Ministry of Foreign Affairs, CBK has rolled out an anonymous online Kenya Diaspora Remittances Survey that is running from March 19 to May 17, 2021.
The Survey focuses on the costs and efficiency of sending remittances, the difficulties encountered in sending cash or non-cash remittances, how remittances are used by the recipients, and the availability of information on investment opportunities in Kenya. This information will help guide policies intended to boost the role of remittances in supporting the economy and livelihoods. Kenyans living abroad are urged to participate in the survey.