The flow of money into the country from Kenyans living and working abroad surged to an all-time high of $295 million (Sh30.3 billion) in June, new data shows.
This, Central Bank of Kenya (CBK) said in its weekly bulletin, was an increase of 21 per cent from $243 million (Sh24.7 billion) of diaspora remittances recorded in May.
The record-breaking remittance inflows, which coincided with the lapse of the June-30 deadline for the return of taxable money stashed outside the country, saw the 12-month cumulative inflows hit $2.77 billion (Sh282.3 billion).
This represented a growth of 13.6 per cent, up from $2.43 billion (Sh248.6 billion) recorded in June last year.
The significant reading in June is an indicator that there might have been a rush to beat the deadline given by National Treasury Cabinet Secretary Henry Rotich in his 2018/19 budget statement on any taxable cash in foreign countries.
The last time the monthly increases in remittance inflows hit a record high was in February 2009 when money from abroad jumped by 34.9 per cent to $53.3 million (Sh5.4 billion in current exchange rates) from $3.9 million (Sh4.03 billion) in January of that year.
Shore up shilling
CBK noted that the June remittances pushed 12-month cumulative inflows to $2.77 million (Sh282.3 billion), a growth of 13.6 per cent from $2.43 million (Sh248.6 billion) in June last year.
“North America, Europe and the rest of the world accounted for 38 per cent, 32 per cent and 30 per cent, respectively, of the remittances in June 2019,” said CBK in the bulletin.
Increased diaspora remittances have helped shore up the shilling at a time when the country’s export earnings have been sluggish.
Cytonn, an investment management company, said in an October last year note that one of the reasons diaspora remittances have continued to rise is because individuals have continued to take advantage of the tax amnesty granted on foreign income.
In 2016, the Tax Procedures Act was amended to provide a tax amnesty on income declared for the year by a person who earned taxable income outside Kenya.
CS Rotich extended the period for applying the amnesty from December 30, 2017, to June 30, 2018, but the uptake remained low still.
Noting that most individuals did not warm up to the amnesty, fearing scrutiny on the source of their funds, Rotich exempted the funds transferred from the provisions of the Proceeds of Crime and Anti-Money Laundering Act even as he extended the period of amnesty by 12 months.
“Mr Speaker, this exemption, however, does extend to proceeds from terrorism, poaching and drug trafficking,” said Rotich.