CENTRAL BANK OF KENYA BUILDING | PHOTO COURTESY: KENYAN WALLSTREET
As reported by Reuters on Thursday, the Central Bank of Kenya (CBK) has introduced new restrictions on money remittance companies, preventing them from selling more than $100,000 per day to any individual. These revised guidelines stipulate that these companies can only sell amounts exceeding this threshold to commercial banks.
CBK issued a statement explaining that these measures were taken in response to the discovery that remittance companies were engaging in wholesale forex exchange activities without adhering to the established standards and regulations governing the sector. Currently, there are approximately 11 money remittance firms authorized by CBK to operate in Kenya.
This new regulation means that individuals conducting substantial business transactions will now be required to go through banks to obtain dollars, potentially impacting some of their operations. These money remittance companies primarily offer services for individuals living abroad who send money back to Kenya.
According to data provided by CBK, diaspora remittances increased in March 2023, reaching KES 48.1 billion, up from KES 41.7 billion in previous months. Remittances constitute a significant source of dollars for Kenya, with growth outpacing that of neighboring countries in recent years. The growth in this sector is driven by the expanding Kenyan diaspora population, leading to the establishment of money remittance services with a global presence.
The decision to regulate the sale of the dollar comes at a time when the local currency is facing depreciation due to rising demand from manufacturers and inflationary pressures. According to CBK’s indicative rates for Thursday, September 14, the exchange rate for the dollar stands at KES 146.76.