NAIROBI, Kenya Feb 2- Kenyans living abroad seem to have clutched their purses in 2009 with Diaspora remittances dropping to $609 million from $611 million in 2008.
In a statement, Central Bank Director of Research Charles Gitari said despite the drop, exchange rate movements saw an increase in terms of shillings with 2009 accounting for Sh47.1 billion higher than 2008’s Sh42.3 billion.
Mr Gitari said 2009 was a better year for remittances as there were no major events like the Safaricom IPO in 2008 and the onset of the global financial crisis.
He says according to their data most of what was sent was to cushion families from the prolonged drought which led to crop failure and a number of animals dying.
“Kenyan emigrants enhanced remittances inflow in 2009 mostly for consumption smoothing due to adverse effects of domestic shocks including the prolonged drought,” he said.
December remittances rose by 40 percent to $56 million from $40 million in December 2008. Similarly, remittances increased by 16.8 percent in the month of December 2009 from $48 million in November 2009.
North America remained the main source of remittance accounting for 51 percent while Europe accounted for 27 percent. Remittance from other countries accounted for 22 percent.
The remittances data could signal that economic activities in the source markets are recovering and will be significant sources of future remittances.
Kenya relies on remittances as a source of foreign exchange and is used to support investment especially in real estate construction and investment in equities in the stock market.
“Besides investments, inward remittances are also used for consumption smoothing as the Diaspora cushion their relatives from the effects of different domestic shocks.”