Editor’s note: This story is part of Mariblock’s “State of Fiat” coverage. Digital assets such as bitcoin are seen as competitors to central bank money. Therefore, we consider informing our audience of the state of their local currencies worthwhile.
Uganda has become Kenya's fastest-growing source of diaspora remittances, surpassing even top global sources like the United States and Saudi Arabia. In the first five months of 2023, the number of remittances sent from Uganda to Kenya more than doubled compared to the same period last year.
- The Central Bank of Kenya (CBK) reports that the total amount of remittances sent from Uganda to Kenya through formal channels was $23.46 million (Sh3.30 billion). This represents an increase of 100.82% over the $11.68 million sent during the same period last year.
- The monthly inflows of $8.85 million in May significantly boosted the total remittances from Uganda to Kenya, propelling the landlocked nation to become the fifth largest source internationally behind the United States, Saudi Arabia, the United Kingdom, and Germany.
- However, the overall growth of Kenya’s remittance has decelerated according to the CBK statistics which claims a 16.86% growth rate within a comparable period last year.
- The decrease in remittances from the US, Kenya’s highest source of diaspora remittance is the primary cause of the decelerated rise in payments.
- Although the CBK did not explain the cause of the rise in remittance from the diaspora, the Kenyan Diaspora Alliance (KDA) attributed the rise to the strengthening of the Ugandan shilling against Kenyan shilling.
“The Uganda shilling has gained not only on the KES [Kenyan shilling]. For Kenyans with savings in Uganda, this is the right time to repatriate,” the KDA said.
- The appreciation of the Ugandan Shilling in comparison to the Kenyan Shilling may have played a part in Kenya's economic expansion, as the Kenyan currency has experienced a decline of more than 10% in value relative to its neighboring currency.
- For instance, one Kenyan shilling is now equivalent to Sh26 Uganda Ugandan shillings, down from about Sh30 last year.