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Remittances share of GDP increases to 2.5%

By RICHARD MUNGAI , The Star

Money sent home by Kenyans living and working abroad is now a key economic growth driver having increased its contribution to the Gross Domestic Product by 2.5 per cent in October last year, Central Bank of Kenya data shows.

The data shows the inflows, officially known as diaspora remittances, increased by 3.9 per cent to $142.6 million (Sh14.78 billion) in October 2016 from $137.1 million (Sh14.21 billion) in October 2015.

The growth in the inflows outpaced sectors such as household, ICT, electricity supply, accommodation and food services, water and financial intermediation services.

Kenya had a GDP of $69.97 billion (Sh7.25 trillion at the current exchange rate) in 2015 and per capita GDP was estimated at $1587 (Sh164,482).

The key economic sectors include agriculture, forestry and fishing, mining and minerals, manufacturing, energy, tourism and financial services.

“The 12-month cumulative inflows to October 2016 increased by 10.3 per cent to $1.68 billion (Sh174.54 billion) from $1.52 billion (Sh158.27 billion) during a similar period in 2015. The 12 month average flow also sustained an upward trend to $140.4 million (Sh14.55 billion) from $127.3 million (Sh13.19 billion) during the same period,” CBK said on Friday.

Remittances are a key source of hard currency, along with tea exports and tourism.

CBK conducts a survey on remittance inflows every month through formal channels that include commercial banks and other authorized international remittance service providers in Kenya.

The data shows remittance inflows from North America accounted for 52 per cent of total inflows and increased by 2.2 per cent from $72.6 million (Sh7.52 billion) to $74.2 million (Sh7.69 billion) in October 2016.

Remittance from Europe accounted for 29.5 per cent of total inflows and declined marginally by 0.3 per cent from $42.16 million (Sh4.36 billion) to $42.04 million (Sh4.35 billion).

Inflows from Europe have recorded an inconsistent growth since UK voted to leave the European Union in June last year.

Analysts have warned that inflows from Europe will be negatively affected as Britain begins to the process to leave the EU.

Inflows from the rest of the world also declined by 7.4 per cent to $26.3 million (Sh2.72 billion) from $28.4 million (Sh2.94 billion).

Source: The Star

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