World Bank Forecasts Diaspora Remittances to Decline by 9 Percent in 2020 to Kes 4.7 trillion
Kenya and its sub-Saharan counterparts are now staring at increase in poverty and food insecurity as diaspora remittances are projected to decline by 9 percent in 2020 to Kes 4.7 trillion ($44 billion) and shrink further by 5.8 percent to Kes 4.43 trillion ($41 billion) in 2021 on account of COVID-19 pandemic.
According to Migration and Development brief by the World Bank and Knowmad, Kenya is likely to bear minimal impact from the reduced flows, despite the pandemic.
“Within the region, remittances to Kenya have so far stayed positive, though flows are likely to eventually decline in 2021. All major remittance-receiving countries will likely see a decline of remittances,” said the bank.
The expected reduced diaspora flows have been attributed to worsened working conditions of migrants in top destinations such as EU, USA and China and gulf countries during the COVID-19 crisis.
“Sub?Saharan migrants are disproportionately affected in host countries as many are in precarious working conditions and informal jobs, with high vulnerability to contagion and loss of employment. In addition, these migrants are often excluded from social protection systems, health care, and government stimulus measures,”
This means instead of a migrant sending money to support loved ones back home, many will be forced to save in order to survive the pandemic.
An estimated 3 million Kenyans who live abroad sent home Kes 280 billion in last year.
However, since the outbreak in March this year, monthly inflows recorded by the Central Bank of Kenya have continued to decline.
In September, remittances amounted to Kes 28.2 billion which was 21.4 higher than Kes 23.2 billion recorded during the same period last year.
CBK data shows that cumulative inflows in the 12 months to September this year have amounted to Kes 320.4 billion ($ 2.967 billion) compared to Kes 300.9 billion ($2.786 billion) in 2019.
USA which accounts for majority share of inflows at 25.2% in the 12-month period to September has been heavily battered by the coronavirus pandemic, recording more than 9 million infections and 236,500 deaths.
“As the COVID?19 pandemic affects both destination and origin countries of Sub?Saharan migrants, the decline in remittances in origin countries is expected to further lead to a decline in foreign exchange revenue, an increase in food insecurity and poverty, and a decline in the overall GDP, which are jeopardizing the hard?won development gains of the past few decades,” the bank warns.
The sub-Saharan region still remains the costliest destination to send money, given that sending $200 costs an average of 8.5% of the amount or roughly 17 dollars compared to South Asia’s 4.98%.
“Sub-Saharan Africa is the costliest region to send remittances to. The promotion of digital technology, combined with a regulatory environment promoting competition in the remittances market and review of AML/CFT regulations, are essential to lowering remittances fees for the region,” said the World Bank in its brief.