Rising Saudi Remittance Fees Push Kenyan Workers Toward Hawala Networks
Rising remittance fees in Saudi Arabia, driven by a new 15 percent value-added tax on transaction charges, are pushing Kenyan migrant workers towards informal money transfer methods, such as hawala.
The new tax, part of broader economic reforms in Saudi Arabia, applies to service fees rather than the remitted amounts, but has significantly increased the cost of sending money home. For lower-income workers, particularly those on Saudi Arabia’s new skill-based permits, this added expense is becoming a substantial burden.
Economists warn that this could lead many workers to abandon formal channels altogether in favour of unregulated systems, further diminishing the volume of funds flowing through official platforms. The Kenya Diaspora Alliance has expressed concern over the growing shift towards informal networks, which bypass banks and remittance companies.
Although these methods ensure funds reach recipients in Kenya, they are not reflected in official statistics, leading to a potential underreporting of foreign exchange inflows. In 2025, remittances from Saudi Arabia fell by more than 25 percent, dropping to $302.1 million from $403.1 million in the previous year.
This decline could complicate Kenya’s economic planning, as remittances play a crucial role in maintaining foreign currency reserves and supporting millions of households. A further move towards hawala could undermine the government’s ability to track and manage these inflows, posing risks for both regulatory oversight and economic stability.
