With many countries worldwide hitting multi-decade highs and rising living costs, remittances from Kenyans living abroad dipped for the first time in 13 years during quarter one of 2023, recording a drop of USD 800,000 from the same period last year.
In its Kenya report, the World Bank attributed part of the decrease to expensive bank transfer charges and the spread that has seen banks pay less per dollar, which has led to an increase in the use of traditional money transfer services that are comparatively cheaper, like trust-based Hawala, personally carrying money, or sending through friends.
In an earlier report, the central bank stated that the average cost of sending money from abroad was in the range of 4%–5% of the total amount. The World Bank has stated that it costs an average of Ksh 1,549 to wire Ksh 27,806, translating to over 5% of the total amount.
Read more: Kenya’s Resilient Economy Shows Growth Amidst Challenges, World Bank reports
Hawala is a trust-based form of wiring money where the sender uses a Hawala agent in their country, who then authorizes a Hawala dealer in the receiver’s country to remit the money to the receiver, who only needs a password to prove identity. There is no documentation of information or identity in this sector.
The US and other Western nations have expressed their concern over the widespread use of Hawala globally, citing the risk of it being a platform for money laundering and financing terrorist activities due to the anonymity of the Hawala sector and the ability to transfer large sums of money anonymously. The law demands a declaration of funds above USD 10,000 in the government’s fight against money laundering.
Read more: The Power of The US Dollar
In an earlier report, the central bank stated that the average cost of sending money from abroad was in the range of 4%–5% of the total amount. The World Bank has stated that it costs an average of Ksh 1,549 to wire Ksh 27,806, translating to over 5% of the total amount.
Amidst the need for cheaper options for remitting money to Kenya, a Nigerian cross-border money transfer service in partnership with PesaSwap unveiled its operations in Kenya, targeting over 500,000 Kenyans living in the USA, UK, and Canada and hoping to get a share of the diaspora remittance market, which currently stood at USD 320.3 million in April 2023, according to CBK, by providing a way to send money back home without transactional charges.
Email your news TIPS to editor@thesharpdaily.com
