Kenyans living and working abroad sent home a record $4.94 billion (Sh637.3 billion) in 2024, surpassing the Central Bank of Kenya’s (CBK) forecast of Sh600 billion.
According to CBK’s weekly bulletin, this represents an 18% increase from the $4.19 billion (Sh540.5 billion) recorded in 2023.
The inflows were particularly strong in December 2024, amounting to $445.4 million (Sh57.5 billion), a 5.2% rise from November’s $423.2 million (Sh54.5 billion).
The United States remained the leading source of remittances, contributing 51% of the total inflows during the year.
“The growth in remittances continues to support Kenya’s current account and the stability of the exchange rate,” CBK noted.
This growth has significantly bolstered the country’s foreign exchange reserves, which as of January 16, 2025, stood at $9.143 billion (Sh1.184 trillion), equivalent to 4.7 months of import cover.
This exceeds the statutory requirement of maintaining at least four months of import cover.
Diaspora remittances have now surpassed Kenya’s traditional export earners—coffee, tea, and horticulture—in generating foreign exchange. This surge comes despite criticisms of inadequate diaspora policies.
Globally, remittance flows to low- and middle-income countries (LMICs) moderated in 2023, reaching an estimated $656 billion, according to the World Bank. Sub-Saharan Africa recorded $54 billion in remittances, a slight 0.3% decline.
The World Bank projected a 2.3% growth for remittances in 2024, although it warned of potential risks such as weak economic growth in high-income countries, oil price volatility, and currency exchange fluctuations.
Kenya ranks among Africa’s top three recipients of diaspora remittances, alongside Nigeria and Ghana.
Money Market and Treasury Performance
Liquidity in the money market remained stable during the week ending January 16, supported by CBK’s open-market operations.
Commercial banks held excess reserves of Sh15.1 billion above the 4.25% cash reserve requirement (CRR).
The average interbank rate rose to 11.33% on January 16, up from 11.12% on January 9. The number of interbank deals increased from 46 to 55, with the average value traded rising from Sh30.9 billion to Sh34.4 billion.
In Treasury auctions, the January 16 Treasury bill auction received bids totaling Sh18.9 billion against an advertised Sh24 billion, achieving a performance rate of 78.6%.
Interest rates for the 91-day, 182-day, and 364-day Treasury bills continued to decline:
- 91-day bill: 9.56% (down from 15.9% mid-2024).
- 182-day bill: 10% (down from 16.7%).
- 364-day bill: 11.3%.
The January 15 Treasury bond auction for reopened 15-year and 25-year fixed-rate bonds was oversubscribed, receiving bids worth Sh59 billion against an advertised Sh30 billion, representing a performance rate of 196.7%. Interest rates for these bonds, which peaked at 19% mid-2024, have since declined to 15.68%.
Kenya’s impressive diaspora remittance growth and stable financial market indicators highlight the critical role of external inflows and prudent fiscal management in sustaining the country’s economy.
