Remittances sent to Kenya from the United States posted a rare double-digit fall in January, dropping to their lowest level in five years as the impact of tax on outbound transfers by President Donald Trump’s administration began to bite.
Latest official data shows that the inflows declined to $194.1 million (Sh25.1 billion) in January 2026, marking a 14.7 percent contraction from $227.5 million (Sh29.4 billion) in the same month last year.
The decline coincided with the enforcement of a one percent excise tax on money sent abroad from the US, which took effect on January 1, 2026, raising the cost of remitting funds for millions of Kenyans living and working in America, which is by far Kenya’s largest source of diaspora inflows.
Data from the Central Bank of Kenya (CBK) shows that January’s performance figure was not only a steep year-on-year drop but also the weakest since 2021, when inflows stood at $169.8 million at the height of Covid pandemic-era disruptions.
In the intervening years, January remittances had climbed consistently, hitting $204.3 million (Sh26.4 billion) in 2023, $221 million (Sh28.6 billion) in 2024, and peaking at $227.5 million (Sh29.4 billion) in 2025.
The latest figures, which capture flows through formal channels, also reveal a shift in the dominance of the US as a source market.
The share of remittances from the US in total inflows dropped to 47.0 percent of the $412.7 million (Sh53.4 billion) sent home in January 2026-marking the first time in five years that America’s contribution has fallen below the halfway mark. The last time this happened was in January 2020, when the share stood at 45.10 percent.
A sustained reversal will be a concern to the Treasury and the CBK, given the outsized role diaspora remittances play in supporting Kenya’s external position.
Remittances are the country’s top sources of foreign exchange-ahead of earnings from tourism and tea exports-and have become a critical buffer for the shilling.
Analysts say the January figures offer the first concrete evidence that the new US levy is influencing remittance flows, either by reducing the amounts sent or prompting migrants to delay transfers as they adjust to higher costs.
In an interview prior to the tax taking effect, Shem Ochuodho, global chairman of the Kenya Diaspora Alliance and president of the Africa Diaspora Alliance, had warned that the measure runs counter to global efforts aimed at lowering the cost of sending money home.
‘This may push the Kenyan diaspora in the US to alternative channels. Remember, tax evasion is illegal, but tax avoidance isn’t. So some people will likely move to cryptocurrencies-and the world is moving toward that direction,’ he said.
A sustained slowdown could also translate into tighter budgets for Kenyan households. Diaspora inflows are widely used to cover essentials such as school fees, rent, healthcare, and small business financing.
A sustained dip would therefore ripple through consumption patterns, particularly in households that rely heavily on overseas support.
The data underscores how policy decisions taken thousands of miles away can have immediate and measurable effects on Kenya’s economy.
With the US accounting for the largest share of diaspora remittances, even small changes in transaction costs can reverberate across households, financial markets, and government planning.