Kenya’s diaspora remittances fell to their lowest level in five months in April, highlighting the growing economic fallout from the prolonged Middle East conflict on one of the country’s most important sources of foreign exchange.
Data from the Central Bank of Kenya showed remittance inflows declined by 11 percent month-on-month to $397.8 million from $450.3 million in March. Compared with the same period last year, inflows were down 5.9 percent from $422.9 million.
The decline comes as tensions involving Iran continue to disrupt Gulf economies, where hundreds of thousands of Kenyan migrant workers are employed, raising concerns about weaker household consumption, slowing foreign exchange inflows and mounting pressure on the country’s external balances.
“Impacted a month later than Pakistan, Kenya’s overseas remittances dropped six percent in April, when Pakistan saw a six percent fall in March,” said Charles Robertson, global chief economist at Renaissance Capital on social media platform X. “The Gulf is a big deal for both countries.”
Remittances remain one of Kenya’s largest and most stable sources of foreign exchange, supporting household incomes, consumption and the country’s external reserves.
The slowdown underscores how geopolitical tensions in the Middle East are beginning to spill over into African economies through labour markets, remittance flows and foreign exchange channels.
For the East Africa’s biggest economy, where Gulf employment has become increasingly important over the past decade, sustained weakness in remittance inflows could weigh on consumer spending, increase pressure on the shilling and complicate efforts by the central bank to preserve foreign exchange buffers.
The broader concern is regional. Several African economies—including Comoros, The Gambia, Lesotho and Liberia—depend heavily on remittances, with inflows accounting for close to 20 percent of GDP in some cases.
World Bank warns of deeper losses
The World Bank recently warned that East Africa could lose as much as $40 million in monthly remittance inflows if the Middle East conflict persists.
According to the lender, the disruption has heightened vulnerabilities around remittance corridors linked to Gulf countries, where many African migrant workers are concentrated in construction, hospitality and service industries.
“The conflict has heightened risks to these flows, threatening an essential income source for countries such as Kenya, which could face monthly losses of up to $40 million,” the bank said in its latest regional update.
The lender added that a prolonged conflict could weaken employment prospects further as hiring slows and layoffs increase across Gulf economies.
“A protracted conflict could further reduce remittance inflows as employment prospects weaken, new hiring slows, and repatriations rise amid contractions in sectors such as hospitality and construction.”
North America records steepest decline
Further analysis of CBK data showed that inflows from North America—Kenya’s largest remittance corridor accounting for 52.2 percent of April inflows—fell 13.8 percent month-on-month to $207.6 million.
Europe declined 12.9 percent to $81.8 million, while the “Rest of World” category, which includes Gulf countries, fell a more moderate 6.2 percent to $108.4 million.
Despite the April weakness, cumulative inflows for the first four months of 2026 still rose slightly to $1.67 billion from $1.66 billion during the same period last year.
Still, concerns are growing around Gulf-related remittance flows.
Kamau Thugge, CBK’s governor, recently lowered the country’s 2026 remittance forecast from $5.42 billion, citing risks tied to the Middle East conflict and Saudi Arabia’s 15 percent VAT on money transfer transactions.
Saudi Arabia’s remittance corridor has already weakened sharply. Flows from the kingdom fell 25.1 percent in 2025 to $302.1 million from $403.1 million a year earlier, reflecting both higher transaction costs and sweeping labour permit reforms introduced in mid-last year.
The remittance slowdown comes as Kenya’s foreign exchange reserves remain under pressure from rising global oil prices and increased currency market intervention.
The country’s reserves fell from $14.5 billion in early March to a low of $13.2 billion by late April before recovering modestly to $13.5 billion as of May 14, equivalent to 5.7 months of import cover.
The central bank has spent nearly $1 billion defending the shilling since the conflict escalated, according to Governor Thugge. Authorities deployed about $941 million in the four weeks to April 2 to stabilise the currency, helping keep the shilling trading near 129 per dollar for most of the past two years.
Bunmi Bailey
Bunmi holds a degree in Economics from the University of Lagos and has over eight years of experience in content writing and journalism.
Her career spans roles as a financial and business journalist at BusinessDay Media and TechCabal, and as Head of Research at SBM Intelligence, an Africa-focused market intelligence and strategic consulting firm.
She also served as Editor at Finance in Africa, a subsidiary of Businessfront and is currently Assistant Editor, Finance (Africa), at BusinessDay.
