Kenya’s diaspora remittance inflows dipped in February 2025, recording Sh49.5 billion ($382.2 million), a decline from January’s Sh55.4 billion ($427.4 million).
This month-on-month volatility contrasts with a robust annual growth trend, as cumulative remittances for the 12 months leading to February surged by 14.5 percent to $4.96 billion (about Sh641.1 billion), up from $4.33 billion (about Sh560.8 billion) in the previous year.
The United States remains the top contributor, accounting for 53% of February’s inflows. These remittances are vital to Kenya’s economy, supporting household incomes, financing education, healthcare, and real estate investments, while also bolstering foreign exchange reserves. This influx of foreign currency helps stabilize the Kenyan Shilling, which, according to the Central Bank of Kenya (CBK) weekly report for the period up to March 14, 2025, traded at Sh129.43 per US dollar on March 13, showing minimal depreciation from Sh129.23 a week earlier.
Despite the dip in February inflows, Kenya’s money market remained liquid, with commercial banks holding excess reserves of Sh13.5 billion above the CBK’s cash reserve requirement. The interbank market was active, with daily deals rising to 37 and the traded value increasing to Sh19.5 billion.
Remittances also play a crucial role in narrowing Kenya’s current account deficit by offsetting import costs and enhancing external stability. However, the CBK projects the current account deficit to widen to 3.8 percent of Gross Domestic Product (GDP) in 2025 due to higher import and external obligation spending. Nonetheless, Kenya’s balance of payments is expected to record a surplus of $591 million (about Sh76.4 billion), supported by capital inflows and rising foreign exchange (Forex) reserves projected to grow by $1.45 billion (about Sh187.9 billion) in 2025.
