The Impact of Foreign Remittances on the Economic Growth of Kenya

Abstract

A booming interest in the topic of foreign remittances has developed over the past few years on the part of academics, donors, international financial institutions, commercial banks, money transfer operators, microfinance institutions and policy makers. The surge of remittances to countries of origin in the last two decades, exceeding aid and foreign direct investment (FDI) to developing countries, has reignited debate on their development potential in receiving countries. Alongside the interest in remittances, there is also growing recognition of the importance of transnational practices in shaping the relationship between migration and remittances. The 2003 World Bank report also noted that remittances are more stable than other kinds of external financial flows and indeed seem to be countercyclical. In times of crisis, whether natural or man-made, migrants tend to send more money to their families to help them survive or recover, whereas foreign investment and lending tend to dry up. The main objective of this study is to determinate the impact of foreign remittances on the economic growth in Kenya. From the discussion of the findings above, it can be concluded that remittances indicators are some of the factors influencing the economic growth in Kenya. Thus it can be concluded that economic growth in the Kenya is largely driven by foreign remittances