National Diaspora policy on cards

via National Diaspora policy on cards | The Herald 12 December 2014 by Martin Kadzere

GOVERNMENT is developing a National Diaspora policy meant to harness investment from Zimbabweans working abroad, according to a progress report on ZimAsset.The policy seeks to “facilitate the issuance of Diaspora Bonds and other financial instruments” to enable Zimbabweans living abroad to participate in the country’s economic revival.

In the 2015 National Budget, Finance and Economic Development Minister Patrick Chinamasa said the Government recognised the “formidable role played by the Diaspora in national development” and as such, the National Diaspora Policy was being finalised.

Minister Chinamasa said Diaspora remittances remained a critical source of liquidity and the Government will put in place systems to encourage the use of formal channels of sending money.

Between January and October this year, international money transfers amounted to $1,42 billion, of which Diaspora remittances were $685,5 million.

Next year, remittances are expected to fall by 6 percent largely due to the projected slowdown of the South African economy, where many Zimbabweans are working, according to Finance Ministry.

CBZ Bank issued its maiden $68 million Diaspora bond in 2012 which expired in April this year. It will issue its second $200 million bond, backed by Afreximbank in the first quarter of next year.

Afreximbank will avail a six months bridge finance gap of $100 million towards the bond to provide funds for companies requiring urgent injection, Minister Chinamasa said. According to Development Foundation Zimbabwe, the Diaspora mitigated the impact of Asian economic crisis in the late 90s. China and India came up with three different business-oriented models in enlisting Diaspora contributions to development.

China invented a “brain trust” model designed to attract its human capital Diaspora and opened investment trade opportunities through its overseas Chinese communities. India’s initiated Diaspora policy is multi-pronged, pursuing direct investment, portfolio investment, technology transfer, market opening and out-sourcing opportunities.

However, some analysts said unlike other countries where Diaspora remittances have significantly contributed towards economic development, the situation in Zimbabwe is different because most people working outside the country are doing mostly low paying jobs and the fact that the US currency (the widely used currency in the country) is strong, there are no exchange gains.