How Trump's migrant crackdown has strained Kenyan households, economy

Millions of Kenyan families face a new financial crisis as Trump Migrants’ crackdown hits vital diaspora remittances

A growing financial crisis looms over millions of Kenyan households and the embattled economy, driven by a sharp, two-month drop in critical diaspora remittances.

The unprecedented decline directly coincides with the escalated US immigration crackdown under President Donald Trump, sending ripples of concern through family’s dependent on overseas earnings.

Data from the Central Bank of Kenya's (CBK) latest weekly bulletin, published on Friday, reveals remittance inflows fell by over half a billion shillings (Sh542.8 million) to $410.1 million in July 2025. 

At the current exchange rate of approximately Sh129.24 per US dollar this translates to roughly Sh53.0 billion.

This represents a 1.0 per cent decrease compared to the $414.3 million (Sh53.54 billion) received in July 2024.

This marks the second monthly drop captured in recent data. As previously reported by The Standard, remittances, declined by 3.86 per cent ($17 million or Sh2.1 billion at the time) in June this year, falling to $423 million from $440 million in May this year.

"The decline raises concerns for Kenya which is heavily reliant on these inflows for household incomes and foreign exchange stability," said Ian Njoroge a Nairobi based analyst. 

The CBK bulletin underscored this vulnerability, stating: "Remittance inflows remain a key source of foreign exchange earnings and continue to support the balance of payments.”

 For millions of Kenyan families, who have relatives abroad, the remittances are a lifeline. 

World Bank data shows diaspora inflows significantly support efforts to reduce poverty, improve health and nutrition, increase birth weights, and boost school enrollment. 

They also enable families to build resilience, finance housing, and weather disasters or financial shocks. 

The consecutive monthly declines therefore directly threaten this critical support system for household’s dependent on money sent home from abroad.

Beyond households, the decline poses risks to Kenya's macroeconomic stability.
 
Remittances are a major source of US dollar inflows, helping maintain the Central Bank of Kenya's usable foreign exchange reserves, which stood at a healthy $11.112 million (4.9 months of import cover) as of August 14 according to the CBK.

Sustained declines could pressure these reserves. Strong remittance flows have also been a key factor supporting the recent stability of the Kenyan Shilling which exchanged at Sh129.24 per USD on August 14. 

Reduced inflows could undermine this stability

As the CBK highlighted, remittances are crucial for supporting Kenya's overall balance of payments, which tracks the country's transactions with the rest of the world.

The dip complicates President William Ruto’s August 2024 initiative to create one million overseas jobs for Kenyans – a plan aimed at tackling unemployment while boosting remittances and foreign exchange earnings to strengthen the shilling.

 President Ruto has been championing diaspora jobs to revive the country’s battered economy as his embattled administration seeks to confront one of the country’s worst ever unemployment crises under a burgeoning youth or Gen Z population. 

This decline closely follows an intensified US immigration crackdown under President Donald Trump, jeopardizing a key source of income for millions.

The United States, which supplies over half (54 per cent) of Kenya’s remittances, is implementing stricter immigration policies under President Trump. 

For Kenya, where an estimated four million citizens abroad, predominantly in the US, Europe, and the Middle East, are a vital economic artery, the impact of US policies affecting their ability to send money home is immediate and profound, threatening both family welfare and national economic buffers.

The July 2025 implementation of the Trump-backed "One Big Beautiful Bill Act," which introduced a 1 per cent tax on all cash-based remittances sent from the US marks part of such recent crackdown. 

While initially targeting non US citizens, the final law covers all senders, including American citizens, with no option for refunds.

Experts warn this tax will have destabilising effects. Some available evidence suggests even a 1 per cent tax could lead to a 1.6 per cent decrease in remittance volumes. 

Furthermore, the broader, increasingly hostile climate – featuring reduced refugee resettlement, increased raids by the US Immigration and Customs Enforcement (ICE) and anti-migrant rhetoric – is reported to be causing anxiety among immigrants, including green card holders. 

Some are said to be transferring savings out of the US amid fears of forced departure, potentially reducing funds available for regular remittances.

While the 12-month cumulative inflows to July 2025 showed an 11.1 per cent increase to $5.080 billion compared to the same period in 2024 ($4.572 billion), the back-to-back monthly declines signal a worrying shift. 

The new US tax and the prevailing climate of fear among immigrants suggest these headwinds are likely to persist, analysts say.

"Instead of cracking down on illegal immigration and cartel finances, this tax will increase global instability and the very incentives that drive emigration in the first place," some economists argue.