How do money transfers help to develop a country? And how do money transfers improve the lives of Kenyans? If you’re asking these kinds of questions, you’ve come to the right place. We want to explore the impact of remittances in Kenya and understand why they have become so important for many people around the world.
A remittance is another word for money transfer, a sum of money sent as a payment or a gift. In modern times, remittances often take the form of money sent home to families and friends by migrant workers. These kinds of transactions are life-changing. And they can improve the fortunes of a developing nation’s economy too.
Money transfers can help to prevent poverty, kickstart small business growth and support the education needs of children. The impact of remittances can be seen in lots of African nations. For example in 2019, Egypt received approximately $26 billion in remittances. That is a huge amount but there are similar stories across many other African nations. And Kenya in particular is a country that has benefited enormously in recent years from overseas money transfers.
In this blog, we’ll take a look at the importance of remittances in Kenya and how money transfers are helping people across the globe.
Remittances in Kenya
Recently, the Central Bank of Kenya (CBK) started to reveal more data about the inflow of remittances from different countries. The US is the largest source of money transfers to Kenya in recent times, accounting for 55.9% of remittances in March 2021.
Some of the other top countries for remittances to Kenya include the UK, Canada, Australia and Saudi Arabia. From all parts of the world individuals in Kenya are receiving support from overseas workers. And the amount of money sent home is staggering too!
In 2020, remittance payments were one of the most stable sources of foreign money for Kenya. And these funds have helped to support families all across the country. Nearly $3.1 billion worth of remittances were received in 2020 and this number has been quite stable for the last few years. More and more people are clued into how the money they make in the United States or the United Kingdom can go a long way in Kenya.
Let’s look at the Kenya shilling to the US dollar as an example. In 2020 the average exchange rate from US currency to Kenyan currency was 1 USD to 106.488 KES. In 2021, 1 US dollar will get you, on average, 108.8 Kenyan Shillings.
This is a great exchange rate for anyone working in the United States who wants to send money home to family or friends in Kenya. This is where remittance payments can really make a difference. The Central Bank of Kenya recognizes the importance of these kinds of transfers, which is why they have set a remittance survey.
Central Bank of Kenya Remittances Survey
In collaboration with the Kenya Ministry of Foreign Affairs and the Kenya National Bureau of Statistics, the CBK brought out an anonymous online Kenya Diaspora Remittances Survey. The CBK understands the importance of remittances to the overall success of the country. They wanted to collect some reliable data to back up their claims. The survey ran from March 19 to May 17, 2021. The results will help the CBK forecast money transfers coming into the country and will help them understand the overall importance of remittances.
These kinds of surveys indicate how seriously developing nations like Kenya are treating international money transfers. At Small World, we know how important it is to have a good infrastructure for money transfers that take the form of digital payments or cash pickups.
Money transfers on the rise
The inflow of money from the Kenya diaspora is still on the rise. April 2021 marked a four-month-high point for the amount of money transfers coming into the country from Kenyans overseas. Kenyans working and living abroad sent home $299.3 million (Sh32 billion) in April. The amount sent in April was $3 million shy of breaking the all-time record of $299.6 million recorded in December last year. There is an upward trend!
There has been a steady recovery period following the impact of Covid-19. However, it also shows the staggering amount of money being sent home on a regular basis by individuals in places like the United States, the United Kingdom and Canada. These money transfers are a vital source of income, especially for people in difficult situations back home in Kenya.
The rise in money transfers has also created more job opportunities for Kenyans hoping to get into the financial and technology sectors. “With Kenya, their fintech strengths lie in payments, remittances, bank and lending technologies….Mobile money and lending platforms dominate Kenya’s fintech industry both in terms of subscription numbers and financial performance.”
As money transfers rise so does the ability of Kenyan’s to benefit from the opportunities being created by the influx of money. In the next few years as the fin-tech industry develops even further we’re likely to see opportunities for people across the country and not just in Nairobi.
Kenya leads the world in mobile money. M-Pesa has helped to revolutionize access to money across the nation. In any country when finances become more accessible, the people of the country are in a better position to make decisions and better themselves.
Transferring money is important because it helps to support and because it helps to kickstart dreams. Maybe they want to start a business, or send a kid to school or move to a different neighborhood. This is where money sent from overseas via favorable exchange rates can really make a difference!
Small World is partnered with M-Pesa, Airtel and Equitel because we know that a major portion of money transfers from overseas are conducted through a mobile wallet. It is a convenient and cost-effective solution for many Kenyan nationals and migrant workers in other countries.
Transfer money to Kenya with Small World
If you need to send money to Kenya you can do it with Small World. Wherever you are in the world we can help you. Small World is a global money transfer service that enables people to support their family and friends even if they are on the other side of the world. For over a decade we have been providing a first class service to ensure that users are able to safely and easily transfer funds overseas.
There are three ways to send money to Kenya with Small World:
- Mobile Wallet
- Bank Deposit
- Cash pickup
So whatever your financial situation is, you don’t need to worry. You can send money effectively with Small World. We have built a network of 250,000 cash pickup locations in over 90 countries. And with over 15 million it is quite clear that we’re doing a pretty good job. So if you want to join the millions of users transferring money overseas and you want to support your loved ones in Kenya, choose Small World.
Your first transfer online is always free!