Economic Bedrock: Remittances Surpass Exports

NAIROBI – Kenya's diaspora remittances, the money sent home by its citizens abroad, have officially crossed the Sh1 trillion mark as of November 2025, solidifying their position as the nation's single largest source of foreign exchange. This landmark figure, announced by Prime Cabinet Secretary Musalia Mudavadi, highlights the critical role of the diaspora in Kenya's economic stability. According to the Central Bank of Kenya (CBK), inflows for the full year of 2024 reached a record US$4.95 billion (KSh640.8 billion), an 18% increase from the US$4.19 billion recorded in 2023. These funds have consistently surpassed earnings from traditional sectors like tourism, tea, and horticulture since 2015, providing vital support to the Kenyan shilling and the country's current account.

The United States remains the dominant source, accounting for 51% of all remittances in 2024. Other significant contributors include the United Kingdom, Saudi Arabia, Canada, and Germany, reflecting the global spread of the estimated three million Kenyans living abroad. On a regional level, Kenya is the leading recipient of remittances in Eastern Africa, with 2024 inflows of US$4.8 billion significantly outpacing neighbours like Somalia (US$1.73 billion) and Uganda (US$1.49 billion), according to World Bank data. These inflows constitute approximately 4.6% of Kenya's GDP, underscoring their macroeconomic importance.

The Digital Disruption: Fintech vs. Traditional Giants

The landscape of how this money travels to Kenya is undergoing a profound transformation, driven by financial technology (fintech) and the ubiquitous presence of mobile money. For decades, legacy players like Western Union and MoneyGram dominated the market with their extensive networks of physical agent locations. While still relevant for cash pickups, these traditional channels are facing intense competition from a new wave of digital-first services.

Companies such as Remitly, WorldRemit, Sendwave, and Wise (formerly TransferWise) are capturing significant market share by offering lower fees, more competitive exchange rates, and greater convenience. Their primary advantage is the ability to deliver funds directly and instantly to recipients' M-Pesa mobile wallets, bypassing the need for physical travel to a bank or agent. This shift is reflected in declining transfer costs. While the average cost of sending US$200 to Sub-Saharan Africa remains high at over 7%, digital-only operators often charge significantly less, sometimes below the UN's Sustainable Development Goal target of 3%. Comparison platforms show that the total cost for digital services can be as low as 0.5% of the transaction value, whereas traditional bank transfers can cost over 11%.

M-Pesa: The Engine of Kenya's Remittance Revolution

At the heart of this digital shift is Safaricom's M-Pesa. Launched in 2007, the mobile money platform has become the bedrock of Kenya's financial system, with over 80% of the adult population having access to formal financial services, largely driven by mobile money. M-Pesa's evolution into a global platform has been a game-changer for remittances. Through strategic partnerships with international money transfer operators (IMTOs) like Western Union, Remitly, and TerraPay, M-Pesa can now receive funds from over 200 markets worldwide. This integration allows the diaspora to send money as easily as sending a text message, with funds being available to recipients within minutes. The platform's deep penetration, even in rural areas, ensures unparalleled accessibility for recipients, a key advantage over bank-centric models.

Regulatory Oversight and Future Outlook

The Central Bank of Kenya (CBK) plays a crucial role in overseeing this dynamic market. Through the Money Remittance Regulations, the CBK licenses and supervises all operators to ensure consumer protection, financial stability, and compliance with anti-money laundering (AML) laws. As the market evolves, the CBK continues to adapt its framework to foster innovation while mitigating risks associated with digital finance. To gain a deeper understanding of this vital economic sector, the CBK, in collaboration with the Kenya National Bureau of Statistics, launched the first-ever Remittances Household Survey in 2025 to collect granular data on remittance flows, usage, and costs.

The future of remittances to Kenya points towards further digitalization, increased competition, and consequently, lower costs for consumers. The integration of new technologies like blockchain and AI is expected to further enhance efficiency and security. As Kenya's diaspora continues to grow and play an indispensable role in the nation's fortunes, the channels through which their support flows will continue to be a critical area of innovation and economic policy.