Saudi remittances fall over permit rules

The decline marked a sharp 52.38 percent drop, translating into a loss of $51.68 million (Sh6.7 billion) in remittances within a single quarter.

This has pushed Saudi Arabia behind the UK, Australia, Germany and the United Arab Emirates (UAE) in diaspora cash sent home to Kenya, signalling fresh strain on the country’s post-Covid labour export drive to Gulf states.

The collapse was the steepest among Kenya’s major remittance corridors, altering the ranking of the country’s top diaspora markets.

Saudi Arabia, which has ranked as Kenya’s second-largest remittance source in recent years, dropped to sixth place this year after being overtaken by the UK, Australia, Germany and the UAE.

CBK Governor Kamau Thugge had earlier linked the slowdown to labour policy changes introduced by Saudi authorities last year.

“There were some changes in labour laws relations in Saudi Arabia. Saudi Arabia has become one of our largest sources of remittances but with those change in labour policies, there has been slow down in remittances from there,” Dr Thugge said in February 2026.

“We expect that this will not be permanent and, therefore, there would be some recovery later in 2026.”

Read: CBK cuts projection of diaspora remittances by Sh40bn

Saudi Arabia introduced the new work permit framework in mid-2025, replacing the decades-old one-size-fits-all iqama structure that treated all foreign workers under the same residency and work permit category regardless of education or work experience.

The reforms started with reclassification of existing foreign workers from June 18, 2025 before new arrivals were placed under the new framework from July 1, 2025.

Enforcement for existing workers, including thousands of Kenyans, took effect on July 5, 2025, while new recruits entered the system from August 3, 2025.

The framework groups foreign workers into highly skilled, skilled and basic categories using academic qualifications, work experience, technical abilities, salary levels and age.

The highly skilled category includes doctors, engineers, IT specialists and corporate executives with at least a bachelor’s degree and five years’ experience.

The skilled category covers technicians, craftsmen and mid-level supervisors with vocational or secondary training plus a minimum of two years’ experience.

The basic category mainly targets entry-level and manual labour positions and is restricted to workers aged below 60 years.

Saudi Arabia’s Ministry of Human Resources and Social Development introduced the reforms to align labour deployment with the kingdom’s economic transformation agenda, reduce dependence on low-skilled foreign workers and improve productivity.

For Kenya, however, the transition appears to have disrupted wages, contract renewals, onboarding schedules and cash transfers because a large share of Kenyan migrants in Saudi Arabia fall under lower-skilled categories.

Many Kenyan workers recruited into Saudi Arabia are employed as housekeepers, cleaners, drivers, security guards and casual labourers, positions that largely fall within the basic category under the new system.

The United States remained Kenya’s largest remittance source despite a 4.57 percent decline in inflows to $622.63 million (Sh80.9 billion) during the review period.

The UK became the second-largest source after remittances rose 27.98 percent to $100.35 million (Sh13.0 billion) from $78.41 million (Sh10.2 billion) a year earlier.

Read: ​​​​​​​UK edges past Saudi Arabia as diaspora labour shifts reshape remittances

Australia overtook Saudi Arabia after inflows rose 16.56 percent to $65.31 million (Sh8.5 billion) from $56.03 million (Sh7.3 billion) in the corresponding period last year.

Germany also moved ahead of Saudi Arabia after remittances increased 21.93 percent to $56.73 million (Sh7.4 billion) from $46.52 million (Sh6.0 billion).

The UAE similarly overtook Saudi Arabia after inflows rose 37.14 percent to $51.01 million (Sh6.6 billion) from $37.2 million (Sh4.8 billion) in the first quarter of 2025.

The shift marks a reversal for Saudi Arabia, which had emerged over the past five years as one of Kenya’s fastest-growing remittance corridors following aggressive labour export drives targeting the Gulf region.

President William Ruto’s administration has promoted overseas jobs as a solution to unemployment and a source of foreign exchange, with thousands of Kenyans recruited into Saudi Arabia for domestic work, driving, cleaning, hospitality and security jobs.

The Gulf kingdom had rapidly risen from a relatively minor remittance source a decade ago into one of Kenya’s top foreign exchange contributors from diaspora earnings.

CBK figures show remittances from Saudi Arabia had nearly quadrupled from $24.07 million (Sh3.1 billion) in the first quarter of 2020 to a peak of $101.36 million (Sh13.2 billion) in the first quarter of 2024.

The first signs of slowdown emerged in the January–March 2025 quarter when inflows dipped 2.65 percent to $98.67 million (Sh12.8 billion).

However, the latest figures now point to a deeper disruption in one of Kenya’s fastest-growing labour migration corridors.

Analysis of formal remittance flows shows monthly cash transfers from Saudi Arabia averaged $16.06 million (Sh2.1 billion) after the reforms, down 51.1 percent from the previous monthly average of $31.42 million (Sh4.1 billion) recorded between August 2023 and July 2025.

The decline suggests the reforms may have interrupted employment transitions or slowed recruitment under the new compliance requirements.

The disruption is likely to intensify concerns over Kenya’s increasing dependence on overseas labour markets, especially low-skilled Gulf jobs, as a pillar of household incomes and foreign exchange earnings.

For many families, remittances from relatives working in Saudi Arabia support school fees, healthcare, rent payments, food purchases and rural home construction.

The sharp drop, therefore, risks affecting household consumption in communities where Gulf migration has become a major economic lifeline.