CBK Launches Landmark Household Remittance Survey

In a pioneering move set to revolutionize the understanding of its vital diaspora economy, the Central Bank of Kenya (CBK) has officially launched the nation’s first-ever Remittances Household Survey (RHS). This ambitious initiative, undertaken in close collaboration with the Kenya National Bureau of Statistics (KNBS) and Financial Sector Deepening Kenya (FSD Kenya), aims to collect comprehensive and granular data on international remittance flows, including both financial and in-kind support received by Kenyan households from abroad, and vice versa.

Scheduled to run between July and September 2025, the survey will target selected households that actively participate in sending or receiving remittances. This critical endeavor seeks to move beyond traditional data collection methods, which primarily track formal channels, to shed light on the often-unaccounted flows through informal networks and non-cash contributions. The CBK emphasized that remittances have become an increasingly indispensable pillar of the Kenyan economy, with inflows hitting a historic high of Sh666.7 billion (approximately $5.1 billion USD) in 2024, accounting for approximately 4 percent of the country’s Gross Domestic Product (GDP), a significant jump from Sh586 billion in 2023. This survey is poised to provide the evidence-based insights necessary to shape effective policies, enhance the security and efficiency of these flows, and ultimately, maximize their developmental impact on Kenya.

The Unstoppable Rise of Remittances in Kenya

Remittances have, for over a decade, surpassed traditional foreign exchange earners like tourism, tea, and horticulture to become Kenya’s largest source of foreign currency. This phenomenal growth underscores the profound connection between Kenya’s diaspora and its domestic economy. The journey of remittances from a relatively minor economic factor to a “critical pillar” is a testament to the resilience and commitment of Kenyans living abroad.

Historically, remittance inflows to Kenya have shown remarkable growth. For instance, in 2021, they reached an all-time record of USD 3.718 billion, a tenfold increase over 15 years. This consistent upward trend, even amidst global economic uncertainties and crises like the COVID-19 pandemic, highlights their counter-cyclical nature – often increasing when other foreign exchange sources decline, providing a crucial lifeline to households. The Central Bank of Kenya’s official data consistently tracks these inflows, demonstrating their growing volume.

The primary sources of these remittances are diverse, reflecting the global spread of the Kenyan diaspora. Significant contributions typically originate from North America (particularly the United States), Europe (especially the United Kingdom), and increasingly, the Middle East. Kenyans working in these regions send money home to support their families, invest in businesses, and contribute to various aspects of national development.

The economic impact of these inflows is multifaceted and deeply interwoven with the fabric of Kenyan society:

• Poverty Reduction and Livelihoods: Remittances directly supplement household incomes, enabling families to meet basic needs such as food, education, healthcare, and housing. Studies, such as those cited by the World Bank, have shown that access to mobile money, a key facilitator of remittances, has directly contributed to lifting hundreds of thousands of households out of poverty in Kenya.
• Consumption Smoothing: For many households, remittances act as a vital safety net, helping to smooth consumption patterns and provide financial resilience against unexpected income shocks or economic downturns.
• Foreign Exchange Stability: The consistent inflow of foreign currency from remittances helps to stabilize Kenya’s foreign exchange reserves, supporting the shilling and managing the balance of payments.
• Investment and Entrepreneurship: While a significant portion of remittances goes towards consumption, a growing share is directed towards productive investments. This includes funding small and medium-sized enterprises (SMEs), purchasing land, building homes, and investing in agriculture, thereby stimulating local economic activity and job creation.
• Human Capital Development: Funds are frequently allocated to education, from school fees to university tuition, and healthcare expenses, contributing directly to the improvement of human capital within the country.

The sheer volume and consistent growth of remittances have made them a central focus for policymakers, recognizing their immense potential to drive sustainable development and contribute to national aspirations like Kenya Vision 2030, which aims to transform Kenya into a newly industrializing, globally competitive, and prosperous middle-income country.

Why a Household Survey Now? Bridging the Data Gap

Despite the acknowledged importance of remittances, a significant challenge has persisted: the incomplete nature of available data. While the CBK diligently collects monthly remittance data from authorized formal channels – including commercial banks, mobile network operators, and licensed money transfer services – this provides only a partial picture. The current data, by its very nature, excludes crucial segments of remittance flows, leading to an underestimation of their true magnitude and impact.

The 2025 Remittances Household Survey (RHS) is designed precisely to bridge these critical data gaps by capturing information on:

• Informal Networks: A substantial volume of remittances still flows through informal channels, such as cash carried by travelers, money sent through friends or family, or unregistered money transfer providers (often referred to as hawala systems). These informal flows are by their very nature undocumented and unrecorded. While formal channels are increasingly preferred (around 70% in some East African corridors), informal methods persist due to factors like lower costs for small transfers, lack of access to formal financial services for senders or recipients, and a desire for privacy. Capturing these flows is essential for a holistic understanding of the remittance landscape. FSD Kenya’s research highlights the continued prevalence of informal remittance channels in East Africa.
• Non-Cash Support (In-Kind Remittances): Beyond monetary transfers, diaspora members often send goods, services, or make direct payments for things like education or medical bills. These “in-kind” remittances are rarely captured in official statistics but represent a significant form of support that directly impacts household welfare and consumption. Understanding the value and patterns of these non-cash transfers is vital for a comprehensive economic assessment.
• Detailed Usage Patterns: Current data offers limited insight into how remittances are actually used by recipient households. The RHS aims to shed light on key aspects such as:
  • Amounts sent and received: Providing more precise figures, including average transaction sizes.
  • Associated costs: Understanding the fees, exchange rates, and hidden costs across various formal and informal channels. This is crucial for advocating for lower remittance costs, a key target under the Sustainable Development Goals (SDG 10.c), which aims to reduce the cost of remittances to less than 3% by 2030.
  • Usage patterns: Detailing the allocation of funds – how much goes to consumption (food, housing, utilities), education, healthcare, debt repayment, savings, or productive investments (business, land).
  • Challenges faced: Identifying difficulties encountered by both senders and recipients, such as issues with access points, documentation requirements, trust in financial institutions, or security concerns.

By collecting this granular information, the 2025 RHS will provide invaluable evidence-based data to inform and shape policy interventions. Without accurate data, policymakers operate in the dark, unable to design targeted programs that truly enhance and secure remittance flows, reduce costs, promote financial literacy among recipients, and channel more funds into productive investments that contribute to long-term national development.

A Collaborative Endeavor: The Power of Partnership

The successful execution of a survey of this magnitude requires robust collaboration, and the CBK has strategically partnered with two key institutions: the Kenya National Bureau of Statistics (KNBS) and Financial Sector Deepening Kenya (FSD Kenya). This tripartite alliance leverages the distinct strengths of each organization to ensure the survey’s credibility, reach, and impact.

• Central Bank of Kenya (CBK): As the nation’s apex bank, the CBK is responsible for formulating and implementing monetary policy, ensuring financial stability, and regulating the financial sector. Its mandate includes collecting and disseminating financial statistics, making it the natural lead agency for a remittance survey. The CBK’s regulatory oversight of Money Remittance Providers (MRPs) means it has a vested interest in understanding the market dynamics to ensure consumer protection, combat illicit financial flows, and promote efficient payment systems. The CBK’s role in licensing and supervising MRPs is crucial for the formal remittance ecosystem.
• Kenya National Bureau of Statistics (KNBS): The KNBS is the principal agency of the Government for collecting, compiling, analyzing, publishing, and disseminating official statistics. Its expertise lies in survey design, sampling methodologies, data collection, and statistical analysis. KNBS ensures that the survey adheres to international best practices for data quality, representativeness, and confidentiality. Their involvement lends methodological rigor and statistical authority to the RHS, guaranteeing that the collected data is reliable and robust for national planning and policy formulation. KNBS surveys are designed to be representative of the adult population and adhere to strict confidentiality protocols under the Statistics Act.
• Financial Sector Deepening Kenya (FSD Kenya): FSD Kenya is an independent trust dedicated to supporting the development of inclusive financial markets in Kenya. Their mandate focuses on improving financial health and capability for underserved populations, including women and micro and small enterprises (MSEs). FSD Kenya brings invaluable expertise in understanding the financial behaviors of low-income households, the dynamics of mobile money, and the challenges of financial inclusion. Their insights will be critical in interpreting the qualitative aspects of remittance usage and identifying opportunities for market-based solutions that enhance the value of remittances for recipients. FSD Kenya often conducts its own research and publishes reports, such as their focus on “Unlocking the power of remittances for women entrepreneurs in Kenya.”

This collaborative approach ensures that the survey is not only statistically sound but also deeply informed by market realities and financial inclusion objectives, maximizing its utility for evidence-based policymaking.

Survey Mechanics: What the RHS Aims to Uncover

The 2025 Remittances Household Survey (RHS) is meticulously designed to capture a holistic view of remittance activities within Kenya. The survey period, from July to September 2025, allows for a focused data collection window.

The “targeting selected households” approach implies a rigorous sampling methodology to ensure the collected data is representative of the broader Kenyan population that sends or receives remittances. This typically involves a multi-stage sampling process, selecting specific geographical areas and then households within those areas, often relying on existing household registers or enumeration areas.

The survey instrument (questionnaire) will delve into a range of critical data points, moving beyond simple transaction values:

• Sender and Recipient Profiles: Basic demographic information about both the senders (e.g., country of residence, occupation, age, gender) and recipients (e.g., location in Kenya, household size, income level, education). This helps understand the socio-economic characteristics of those involved in remittance flows.
• Amounts and Frequency: Detailed information on the size and frequency of remittances, distinguishing between regular support and one-off transfers. This will help quantify the total value of remittances more accurately, including those sent through informal means.
• Channels Used: Identification of both formal channels (banks, mobile money operators like M-Pesa, money transfer organizations like Western Union or MoneyGram) and informal channels (friends, family, bus drivers, hawala systems). This is crucial for understanding market preferences and the actual reach of formal services.
• Costs Associated: Inquiry into the fees incurred, exchange rate margins, and any other hidden costs associated with different remittance channels. High transfer costs remain a significant challenge for remittances to Africa, with averages often exceeding global benchmarks.
• Purpose and Usage of Funds: This is a key area of inquiry. Questions will explore how the received funds are utilized:
  • Basic consumption: Food, clothing, housing, utilities.
  • Human capital investment: Education (school fees, tuition), healthcare (medical bills, insurance).
  • Debt repayment: Loans, mortgages.
  • Savings and Investment: Funds put into savings accounts, SACCOs, micro-businesses, land, or other productive assets.
  • Social obligations: Support for extended family, community contributions.
• Challenges and Difficulties: What obstacles do senders face (e.g., high costs, lack of reliable channels, regulatory hurdles in host countries)? What challenges do recipients encounter (e.g., access to cash-out points, financial literacy, security concerns)?
• Outward Remittances: The survey also seeks to capture data on funds sent from Kenya to households abroad. While often smaller in volume than inflows, these outflows are important for a complete picture of Kenya’s balance of payments and its role in regional economic dynamics.

The confidentiality of the statistical information provided by households is guaranteed under the Statistics Act, CAP 112 Laws of Kenya [Rev. 2022]. This assurance is critical for encouraging honest and accurate participation, as households need to trust that their sensitive financial information will only be used for statistical purposes and will not be shared individually.

Global Remittance Dynamics and Kenya’s Place

Kenya’s remittance story is part of a larger global narrative. Worldwide, remittances continue to be a resilient and growing source of external finance for developing countries, often surpassing Official Development Assistance (ODA) and Foreign Direct Investment (FDI). The World Bank projects continued strong growth in remittance flows to low and middle-income countries (LMICs), with forecasts of 2.3% growth in 2024 and 2.8% in 2025, reaching an estimated $690 billion globally in 2025. This sustained growth is driven by factors such as widening income disparities, demographic pressures, and increased migration in search of economic opportunities.

Africa, in particular, remains a major recipient region. While Nigeria often leads in terms of absolute volumes, Kenya consistently ranks among the top recipients in Sub-Saharan Africa and is a leader in East Africa. The GSMA’s State of the Industry Report on Mobile Money 2025 highlights that Africa now processes 74% of global mobile money transactions, amounting to over $1.1 trillion in 2024. This underscores the pivotal role of mobile money in facilitating remittances on the continent.

However, the global remittance market faces persistent challenges:

• High Costs: Sub-Saharan Africa remains the most expensive region globally to send remittances to, with average costs significantly higher than the global average. These high costs erode the value received by households and reduce the developmental impact of remittances.
• Regulatory Hurdles: Complex and varying regulatory environments across countries can create barriers for money transfer operators, limiting competition and keeping costs high.
• Lack of Transparency: Opaque fee structures and exchange rate margins can make it difficult for consumers to compare services and choose the most cost-effective channels.
• Financial Exclusion: While mobile money has expanded access, many individuals, particularly in remote areas, still lack access to formal financial services, pushing them towards less secure and more expensive informal channels.

Technological advancements, particularly in mobile money and fintech, are playing a transformative role in addressing these challenges. Platforms like M-Pesa have revolutionized the remittance landscape by offering convenient, fast, and relatively affordable channels for sending and receiving money. Recent partnerships, such as the Safaricom and PayPal collaboration, further enhance interoperability and connect local mobile money ecosystems with global digital payment networks, streamlining cross-border transactions for millions. This integration is crucial for supporting the growing gig economy and enabling greater participation in international e-commerce.

Policy in Action: Leveraging Remittances for National Development

The insights gleaned from the 2025 RHS will be instrumental in shaping evidence-based policy interventions aimed at maximizing the positive impact of remittances on Kenya’s development agenda. The CBK’s commitment to this survey reflects a proactive approach to leveraging this vital resource.

Potential policy areas that could benefit from the survey’s findings include:

• Reducing Remittance Costs: By understanding the true costs associated with various channels, the CBK can work with regulators and service providers to promote competition, increase transparency, and encourage the adoption of more affordable transfer methods. This aligns directly with global targets to reduce remittance costs.
• Promoting Formal Channels: Insights into informal flows can help design strategies to incentivize the use of formal, regulated channels, which offer greater security, traceability, and potential for integration into broader financial systems.
• Enhancing Financial Literacy: Understanding how remittances are used can inform financial literacy programs that encourage recipients to save, invest, and manage their funds more effectively, rather than solely for consumption.
• Facilitating Productive Investments: Policies could be developed to create attractive investment opportunities for diaspora members and remittance recipients, channeling funds into key sectors like agriculture, real estate, and small businesses. This could involve creating specific financial products or investment vehicles tailored to the diaspora.
• Improving Data Collection and Analysis: The RHS itself is a step towards improving national statistics, which is crucial for accurate economic planning and forecasting. Continued surveys and data sharing between institutions will build a more robust statistical framework.
• Supporting the Diaspora: The survey’s findings on challenges faced by senders and recipients can inform policies aimed at improving consular services, addressing legal hurdles, and fostering stronger ties with the diaspora community, recognizing their role as development partners. Kenya’s Diaspora Policy already emphasizes mainstreaming the diaspora into national development.

The data will also empower the government to better understand the role of remittances in cushioning households against economic shocks, particularly in vulnerable communities. This information can then be used to design targeted social protection programs or disaster relief efforts that complement private remittance flows.

Challenges and Opportunities in the Remittance Landscape

While the 2025 RHS offers immense promise, the remittance landscape in Kenya, and globally, presents both opportunities and challenges that will continue to evolve.

Challenges:

• Global Economic Volatility: Economic downturns in host countries can impact the ability of diaspora members to send money, leading to fluctuations in remittance inflows.
• Regulatory Compliance: Strict Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations, while necessary, can sometimes increase the cost and complexity of formal transfers.
• Exchange Rate Fluctuations: Volatile exchange rates can reduce the value of remittances received, impacting household purchasing power.
• Digital Divide: While mobile money penetration is high, a portion of the population, particularly in very remote areas, may still lack access to mobile phones or reliable network coverage, limiting their access to digital remittance channels.
• Competition: The growing number of players in the remittance market, including traditional money transfer operators, banks, and fintech startups, creates a competitive environment that can drive down costs but also requires robust regulation to ensure consumer protection.

Opportunities:

• Technological Innovation: Continued advancements in fintech, blockchain, and artificial intelligence (AI) can further reduce costs, increase speed, and enhance the security of remittance transfers.
• Interoperability: Greater interoperability between mobile money platforms, banks, and international payment systems will create a more seamless and efficient global remittance ecosystem.
• Product Diversification: Developing new financial products and services tailored to the needs of diaspora members and recipients, such as investment opportunities, insurance, and credit facilities linked to remittance flows.
• Policy Harmonization: Regional and international cooperation on remittance policies can streamline regulations, reduce barriers, and facilitate cross-border flows.
• Leveraging Diaspora Investment: Beyond direct remittances, there’s immense potential to mobilize diaspora savings and investments into productive sectors of the Kenyan economy, contributing to long-term capital formation.

Conclusion: A Data-Driven Future for Kenya’s Diaspora Economy

The Central Bank of Kenya’s launch of the first-ever Remittances Household Survey marks a pivotal moment for Kenya’s economic planning and its relationship with its global diaspora. By seeking to collect comprehensive, granular data on both formal and informal remittance flows, including non-cash support, the CBK, KNBS, and FSD Kenya are laying the groundwork for truly evidence-based policy interventions.

The findings from this survey, expected to be released after the data collection period concludes in September 2025, will provide invaluable insights into the true magnitude, costs, usage patterns, and challenges associated with remittances. This deeper understanding will enable the government to design more effective strategies to reduce transfer costs, promote financial inclusion, channel more funds into productive investments, and ultimately, maximize the developmental impact of these vital inflows for millions of Kenyan households.

The success of this initiative hinges on the full cooperation of the selected households. Their participation is not merely a statistical exercise but a direct contribution to shaping policies that will enhance and secure a critical lifeline for Kenya’s economy and its people. As remittances continue to grow and evolve, this survey will serve as a crucial compass, guiding Kenya towards a more informed, efficient, and prosperous future driven by the unwavering support of its global diaspora.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

6th August, 2025