Uganda has emerged as the fastest-growing source of diaspora dollars flowing into Kenya. File Photo Shutterstock
By Business Daily Africa
Uganda has emerged as the fastest growing source of diaspora dollars flowing into Kenya at a time the remittances from top global sources are slowing down on inflationary pressures squeezing earnings for citizens working abroad.
Diaspora remittances from Uganda doubled in the first five months of the year compared to last year, according to the official data, despite total flows growing 1.81 percent.
The cash wired by the diaspora community in Uganda through formal channels amounted to $23.46 million (about Sh3.30 billion where $1 is equivalent to Sh140.45) in the review period, a 100.82 percent jump over $11.68 million (Sh1.64 billion) in a similar period last year.
The inflows were largely boosted by monthly inflows of $8.85 million (Sh1.24 billion) in May which catapulted the landlocked country to become the fifth largest source globally after the US, Saudi Arabia, UK and Germany, according to data tracked by the Central Bank of Kenya (CBK).
The CBK data does not usually explain the shifts in diaspora remittances in its official report, but the Kenya Diaspora Alliance (KDA) hinted at the strengthening of the Ugandan shilling against Kenya’s as part of the drivers of the inflows.
“The Uganda shilling has gained not only on the KES [Kenyan shilling]. For Kenyans with savings in Uganda, this is the right time to repatriate,” the KDA, the lobby which draws membership from Kenyans abroad, said in responses to the Business Daily.
The Kenyan unit on Thursday exchanged at an average of 26.08 Ugandan shillings, 13.39 percent weaker than 30.11 end of last year.
This has come at a time dollar inflows from Kenyans abroad, the largest source of forex ahead of tea exports and tourist receipts, have this year slowed to single-digit growth compared to double-digit jumps in recent years.
For example, the remittances between January and May amounted to nearly $1.72 billion (Sh241.37 billion), a 1.81 percent rise over $1.69 billion (Sh237.07 billion) in the corresponding period last year.
This is a slowdown from a growth of 16.86 percent in a similar period last year and 23.09 percent in 2020, according to the CBK data.
The softening growth in the remittances is largely on account of reduced flows from Kenyans in the US, who account for nearly 60 percent of the total flows.
The inflows from the US in the first five months of the year, for instance, dropped 5.04 percent year-on-year to $964.25 million.