The money sent home by Kenyans working abroad declined at the start of the year, according to data from the Central Bank of Kenya (CBK).
In January, remittances amounted to $427.4 million (Sh55.5 billion), a drop from $445.4 million (Sh57.9 billion) recorded in December. However, this figure remains higher than the $412.4 million (Sh53.6 billion) sent in January last year.
While CBK did not specify reasons for the decline, analysts warn that remittances may continue to shrink if the United States enforces stricter immigration and funding policies under President Donald Trump’s administration.
Despite the monthly dip, cumulative inflows over the 12 months leading to January 2025 surged by 16.6% to reach $4.96 billion, up from $4.25 billion recorded in the same period in 2024.
“Remittance inflows continue to support the current account and foreign exchange market. The United States remains the largest source, contributing 53.2% of total remittances in January 2025,” CBK noted.
These inflows contributed to the country’s foreign exchange reserves, which stood at $9.4 billion (Sh1.2 trillion) as of February 13. This meets CBK’s statutory requirement to maintain at least four months’ worth of import cover, with the reserves currently covering 4.8 months.
Meanwhile, the government’s short-term securities experienced lower demand in the week ending February 14 as returns continued to fall.
CBK data shows that the Treasury received only 2,526 bids against the 4,000 advertised, with yields dropping from 9.1% to 8.9%. This continues a trend of declining rates observed since November last year.
According to money market analyst Geoffrey Lubinu, returns on government securities are expected to decline further as commercial banks comply with regulatory directives to lower lending rates.
Several banks, including Cooperative Bank, have already reduced their lending rates by 2% to 3% to boost liquidity in the economy.
“Banks, which account for more than half of investments in government securities, are now shifting focus to lending businesses and individuals, reducing demand for short-term Treasury bills. Although long-term bonds attracted strong interest, their returns are also gradually declining,” Lubinu explained.
