Impact of exchange rate on Diaspora Remittances in Kenya
Abstract
Diaspora remittance has become a key driver in economic growth in Kenya and is a
major source of foreign exchange in the Kenyan economy only rivaled by tourism,
horticulture and tea export. Remittances have led to economic boom and have resulted
in improvement of both economic and social welfare of direct and indirect
beneficiaries. Remittances are influenced by several factors key among them being
the exchange rate between the resident country and the home country of the remitter.
The objective of this research was to establish the impact of exchange rate on
Diaspora remittances. A descriptive study was used in the research using secondary
data obtained from the Central Bank of Kenya and the Kenya National Bureau of
Statistics. The data was analyzed using a multiple regression model to obtain
coefficient of the variables. SPSS was used to analyze the data.
Findings of the study indicated that exchange rate does indeed has a positive impact
on Diaspora remittances to Kenya. In the findings it was also evident that this was not
the only factor affecting Diaspora remittances hence the study concluded that
exchange rate impact Diaspora remittances besides other prevailing factors like
interest rate, inflation rate and other factors which were beyond the scope of this
research.
The study recommends policy formulation to safeguard a stable exchange rate regime
and to regulate remittances coming through informal channels. This will allow for
predictability of the exchange rate and remove uncertainty in the remittance circle.
Citation
A Research Project Submitted In Partial Fulfillment Of The Requirement For The Award Of The Degree Of Master Of Business Administration School Of Business, University Of NairobiPublisher
University of Nairobi School of Business