What you need to know:
- The survey, which involved 1,321 respondents, was conducted between March 19 and May 17 last year.
- The survey sought to get details of the alternative channels and the difficulties faced while making both cash and non-cash transfers.
Kenyans turned to their friends and relatives abroad for cash to buy food, pay rent and meet other household needs following massive job losses occasioned by the Covid-19 pandemic.
This is according to Kenya’s first ever survey on diaspora remittances, whose results were released by the Central Bank of Kenya (CBK) on Thursday.
The survey, which involved 1,321 respondents, was conducted between March 19 and May 17 last year.
The survey sought to assess the efficiency and cost of the channels that Kenyans in the diaspora use to send money back home.
The survey also sought to get details of the alternative channels and the difficulties faced while making both cash and non-cash transfers.
It also sought to establish how the remittances are used and the level of information the diaspora has about investment opportunities available locally.
The survey shows that the Covid-19 pandemic also badly hit the finances of Kenyans living abroad, cutting their average annual support for their friends, relatives or business partners in Kenya to $4,000 (Sh454,000) in 2020, from $6,000 (Sh681,000) in 2019.
However, their dependants were having it worse locally after the pandemic saw millions lose their jobs while others had their salaries slashed.
“Despite this lower average amount sent in 2020, the respondents reported increased demand for financial support by recipients,” said the survey.
Data from the Kenya National Bureau of Statistics (KNBS) shows about 1.72 million workers lost their jobs in three months to June 2020 when Kenya imposed containment measures that led to layoffs and pay cuts.
The data further shows the number of people in employment fell to 15.87 million between April and end of June that year, compared to 17.59 million the previous quarter.
Kenya has since gradually reopened the economy, including resumption of learning in schools, lifting of the dusk-to-dawn curfew as well as lifting of restrictions to movement, which has jumpstarted the economy and boosted job creation.
Kenyans living abroad said they expected to increase financial support to their dependants back home.
Remittances in cash
“Moreover, the respondents reported that they expect to sustain their level of support and remittances in 2021, with a large proportion expecting to remit more in 2021 relative to what they remitted in 2020,” said the survey.
The survey revealed that more than 70 per cent of the respondents sent remittances in cash through formal channels, mainly money transfer companies, banks and mobile money operators.
It also showed that that the remittances are sent regularly, mostly on a monthly basis, to nuclear family members to largely cater for basic household needs such as food, household goods, medicine and education expenses.
It also showed that the majority of recipients are self-employed, unemployed or students, indicating a relatively high dependency ratio of Kenyans on the diaspora.
Meanwhile, the survey showed slightly more than a half of the remitted amounts were allocated to investment in real estate for recipients, mortgage repayment for senders as well as purchase of food and household goods.
The survey comes just days after the CBK released data showing that Kenyans living in the diaspora remitted a record Sh39.75 billion last month, driven by a rebound in economic activities in key source markets such as the US, Europe and the Middle East.
It showed remittance inflows into the country hit $4,350.6 million (Sh37.75 billion) for the first time, a 17 per cent increase from $299.6 million (Sh33.97 billion) received in December 2020, which was also a record high.
Remittances are Kenya’s single largest source of foreign exchange, having long overtaken horticulture, tea and tourism earnings, which had for long been the country’s leading sources of foreign cash.