The high costs of sending money home means that Kenyans in diaspora are losing up to 11.35 % when sending money home.
Each year, about Kshs 1.75 trillion (US $1.7 billion) is sent into Kenya in remittances and the final week before Christmas is one of the busiest times to send money. The World Bank reports that the average cost of sending money is around 7.21% with sub-Saharan Africa being one of the most expensive regions to send money to at 9.13%.
WorldRemit research revealed that switching to lower cost channels could mean thousands of Kenyans could receive an extra Christmas present this year. The savings were highest when sending from New Zealand to Kenya with a saving of US $22.7 (Kshs 2,349), enough to buy a bottle of scotch whisky.
With salaries in New Zealand in jobs such as manual labour or retail work earning between US $11-13 on average, these high costs mean the diaspora are having to work an extra two hours to pay the elevated costs of sending money home this Christmas through high cost channels. The impact of the savings could be even more significant to those back home where the saving of US $22.7 could be more than a day’s salary.
Sharon Kinyanjui, Head of East Africa, WorldRemit commented: “It’s important to consider that the cost of sending money goes far beyond the transactional cost. Traditional methods mean travelling to an agent to pay in money, taking time off work to do so knowing your family and friends receiving the money will have to do the same. By sending money from one mobile to another instantly, we can save people not just money, but also time.”
It costs around US $4 (Kshs 413) for a return trip to travel from Kajiado to pick up cash in Nairobi, taking more than 3 hours to go there and back. Even those living within Nairobi can take up to an hour to travel to an agent and back, costing up to US $2 (Kshs 206) return trip.
WorldRemit data suggests that most of their customers send money around 3-4 times a month so the savings across the month of December could be even greater. The savings on travel and time alone could be enough to buy a box of chocolates.
Kinyanjui, added: “We see that being able to send money more frequently without paying high costs and wasting time brings families and friends closer together even when living hundreds of miles apart. So we hope we can give people more time with family and friends this Christmas.”
The savings were calculated based on sending the equivalent of US $200 in the local currency of the sender country using a weighted average of pay-in and pay-out methods for the leading traditional money transfer operator compared to WorldRemit.