Kenya’s diaspora remittances crossed the $5 billion mark in 2025, marking a historic milestone for the economy.
However, new Central Bank of Kenya (CBK) data shows the achievement was accompanied by the weakest growth rate in more than 15 years, highlighting rising pressures in key source markets even as digital channels keep inflows resilient.
CBK figures show remittances rose 1.9% year on year to US$5.04 billion (about KSh650 billion), up from US$4.95 billion in 2024.
While this cemented remittances as Kenya’s single largest and most stable source of foreign exchange, growth slowed to levels last seen after the 2008 global financial crisis.
“Diaspora remittances continue to provide a critical buffer for the balance of payments at a time when other external inflows remain under pressure,” the CBK said in its latest monthly bulletin.
The slowdown was driven largely by softer labour market conditions in the United States, which accounts for roughly half of Kenya’s remittance inflows.
CBK data shows monthly inflows dipped in November before rebounding in December over the Christmas period, reflecting job uncertainty in migrant-heavy sectors, tighter immigration scrutiny and rising transaction costs.
“Higher costs of living and policy uncertainty in advanced economies have moderated disposable incomes for some diaspora households,” Stated the Central Bank.
Despite the slide in growth, remittances remain economically vital. They rival exports and tourism as a foreign-exchange anchor, supporting household consumption, education, healthcare and small businesses, while helping stabilise the shilling through steady dollar supply.
Beyond the US, key source corridors include the UK, Germany, Canada, the Gulf states and Australia.
Looking ahead, CBK and Treasury projections point to modest growth in 2026 rather than a sharp rebound. Forecasts suggest inflows could rise by 3–5% this year, assuming stable global conditions and continued uptake of formal digital channels.
Fintechs are expected to be central to sustaining growth. Companies such as M-Pesa Global, Chipper, Flutterwave, Wise, WorldRemit and PayPal-linked Xoom have expanded low-cost, mobile-first corridors into Kenya, reducing reliance on cash-based transfers.
The government’s 2025–2030 Diaspora Investment Strategy also aims to lower remittance costs toward the global 3% benchmark and channel part of the flows into long-term investment.
As Kenya enters a new era of US$5 billion-plus annual remittances, the challenge for 2026 will be converting resilience into renewed momentum amid a tougher global backdrop.
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