National Diaspora Policy on the cards

Source: National Diaspora Policy on the cards – Sunday News August 7, 2016

Dumisani Nsingo, Senior Business Reporter
THE Government will soon enact a National Diaspora Policy aimed at facilitating tranquil foreign currency remittances from Zimbabweans abroad in a bid to support the country’s economic turnaround efforts as the flow of Foreign Direct Investments appears to be stuttering.

Macro-Economic Planning and Investment Promotion Minister Dr Obert Mpofu said Cabinet has approved the Diaspora Policy and was now at the Attorney-General’s office for legal scrutiny.

“There was no Government mechanism to provide cover to diasporans sending money back home. We are now coming with a Diaspora Policy of making it easy for the diasporans to bring in their money.

“There has been a lot of scepticism on the role of Government’s efforts of making sure that people bring in their money without facing a lot of hardships but of course it has been politicised,” Dr Mpofu said.

Zimbabwe has a diaspora community of approximately 2,2 million across the world.

“We have been approached by a number of our diasporans in countries like Australia and the United Kingdom and they have participated during our consultations. We are also working closely with the International Organisation for Migration (IOM) in shaping up the policy,” said Dr Mpofu.

He said countries such as Ethiopia, Egypt and Cape Verde were examples that have benefited from their diaspora communities. Ethiopia is one of the first countries to issue Diaspora Bonds to finance infrastructure.

“We have been approached by a number of our diasporans in countries like Australia and the United Kingdom and they have participated during our consultations. We are working closely with the IOM in shaping up the policy,” said Dr Mpofu.

Strategically managed and leveraged, the diaspora can be a very powerful tool in the country’s economic advancement. The Zimbabwe diaspora contributes about seven percent of the Gross Domestic Product (GDP).

The Government believes the diasporans have the potential to become an important class of investors and a vital economic component not only in resuscitating the country’s economy but in national development.

It is also the policy’s thrust to ensure Zimbabweans outside the country make use of the expertise they would have gained over the years in other countries for economic development.

The policy will ensure effective participation of Zimbabweans outside the country in national development.

“Right now people are using neighbouring countries like South Africa and Botswana to remit their money and if that money happens to be sent through unscrupulous individuals there, it is misappropriated and doesn’t benefit the country.

“The new policy will enable people to send money to banks of their choice but for infrastructural development we are working closely with Homelink. We are also working very closely with the Ministries of Industry and Commerce and that of Finance as well as relevant ministries,” said Dr Mpofu.

Remittances into Zimbabwe fell 16 percent in the first quarter this year to $192,9 million against $231,4 million recorded in the same period a year ago. Remittances consist of both diaspora and non-governmental organisations flows.

According to the Ministry of Finance, the slowdown is attributed to slow recovery in global and regional economic activity while the stronger US dollar also meant that remittances from countries such as South Africa would have a much lower value if converted.

In January, remittances stood at $62,9 million only to drop slightly to $62,92 million in February.

In March, there was an increase of seven percent on the previous month to $67,41 million.

Remittances, however, continue to be one of the main sources of net financial flows not only in Zimbabwe but in Africa.
Bulawayo-based economist Dr Bongani Ngwenya said the country’s economy has been largely sustained by diasporan remittances since its meltdown in 2007 to date.

“As the economy continues failing and fiscal space shrinking, diasporan remittances remain a significant and potential source of revenue into our country. Politically we have at some point labelled diasporans enemies. It is high time we respect them for their economic contribution that they are making to this economy, for it to tick. Diasporan remittances require that formal recognition by our Government as significant source of revenue inflows like export earnings,” said Dr Ngwenya.

He also said the Government was making concerted efforts to honour its Bilateral Investment Protection and Promotion Agreements (BIPPAs) with various countries in an effort to attract investments.

BIPPAs provide guarantees to protection of foreign investment. They usually contain clauses for dispute settlement, expropriation and compensation, favourable treatment, property rights as well as transfer of payment which give confidence of security to foreign investors.

“We are honouring our BIPPAs and updating most of the agreements and for those that we have signed we are honouring, even when there is a dispute we expeditiously try to resolve it and in most cases disputes arise when land authorities earmark farms for resettlement without knowing there is an agreement. We have always come in to provide status of that particular farm or property.

“These BIPPAs have to be honoured, of course there are some areas without clear documentation and in such cases we have always come in to advise. We have been receiving a lot of countries and foreign investors with various grievances. We are very happy with the nature of BIPPAs we have and Zimbabwe is signatory to a number of BIPPAs with countries like China, Germany among others,” said Dr Ngwenya.

He said a country’s commitment to ensuring low potential investment risk and boosting investor confidence can also be measured or judged by the country’s attitude towards respecting and honouring BIPPAs.

“These are very important bilateral agreements that respective countries enter into for mutual and long lasting economic and investment relationships. It is important that these BIPPAs be honoured by parties in such agreements and arrangements.

“The party that breaches or violets these agreements stands to be affected seriously in terms of loss of trust, investor confidence and the perceived investment risk tends to go high. Potential investors are scared away. If these BIPPAs are entered into within a region like Southern Africa Development Community, the violating member risks punitive measures taken by other regional members in retaliation,” he said.