Kenya’s Biggest Source of Foreign Currency Hit by Coronavirus

NAIROBI (Capital Markets in Africa) — Kenya’s biggest source of foreign currency slumped last month, with the central bank indicating that shocks caused by the coronavirus will have a greater impact on the economy for the rest of this year.

Kenyans living outside the country sent home $208 million in April, about 9% less than they did in March, according to data from the central bank. It expects those so-called remittance payments to fall as much as 15% for the whole of this year.

Transfers dried up from nations in Europe, the Middle East and elsewhere in Africa. That underscored the dependence many low- and middle-income nations have on remittances. The World Bank estimates those payments may fall 20% to $445 billion this year from a record $554 billion in 2019.

The decline will be sharper for sub-Saharan Africa, where the World Bank estimates payments may fall 23.1% to $37 billion in 2020.

For Kenya, inflows held up from the U.S. and Canada, which contributed about 58% of the total. Payments dropped from the U.K., Germany, South Africa, U.A.E., Saudi Arabia, and other eastern Africa countries, according to the central bank.

Kenya’s foreign reserves declined to $8.49 billion in the week ending May 21 from $8.53 billion a week ago. The authorities see a boost in the reserves on new borrowings including $1 billion that the World Bank approved last week.

Source: Bloomberg Business News