Nairobi Dispatch: Two Pressures Are Squeezing the Money Kenyans Abroad Send Home

Why you should care: Remittances are now Kenya’s single biggest source of foreign exchange — ahead of tea, coffee, and tourism — at roughly $5.04 billion in 2025. Two forces are pressing on that lifeline at once, and the Central Bank of Kenya has already cut its 2026 projection by about $313 million (Sh40 billion) because of them.

Pressure one — the U.S.: The U.S. is Kenya’s largest remittance source, about 54% of all inflows ($2.73 billion in 2025). The new 1% U.S. tax on cash-funded transfers (see our Sending Money brief) adds friction precisely on the corridor that matters most to Kenya. The fix on the sender’s side is the same: fund transfers digitally, not with cash.

Pressure two — the Gulf: Saudi labour-law reforms disrupted wages and contracts for thousands of Kenyan workers, and inflows from Saudi Arabia fell about 25% year-on-year. The CBK expects a partial recovery as the Saudi market settles, projecting ~4% remittance growth for 2026 — but that’s a rebound from a knock, not smooth sailing.

Practical: Kenya’s real edge is its digital rails — M-Pesa, Wave, Chipper Cash, Pesapal — which make the digital-funding fix easy and cheap to act on. If you send from the U.S., moving off cash funding sidesteps the 1% tax entirely and the money still lands on the same mobile-money rails.

Signal: When more than half your inbound remittances come from one country, a small policy change there is a macro event at home. Worth watching how the U.S. tax and any further Gulf labour shifts move the CBK’s numbers through the year.

— TWB Newsroom