Diasporan remittances boost economy

via Diasporan remittances boost economy | The Herald June 26, 2015

ZIMBABWE has received a cumulative $3,5 billion since 2009 from its nationals in the Diaspora who now account for about 25 percent of liquidity in the domestic economy, with authorities now working to optimise the inflows, a senior official said.

In fact, remittances from the Diaspora have outperformed inflows from portfolio ($1,08) billion) and foreign investments ($2 billion) during the five-year period (2009-2014), demonstrating availability of a huge liquidity pool Zimbabwe can exploit.

This comes as Government continues to explore ways to improve the liquidity situation in the economy amid low export performance, low investment and outside development assistance at a time the country suspended the local currency.

Reserve Bank of Zimbabwe Deputy Governor Dr Kupukile Mlambo told the Zimbabwe National Chamber of Commerce annual congress that ends in Victoria Falls today that Diaspora inflows have grown from $294 million in 2009 to $837 million. The congress was themed “Addressing competitiveness challenges in the emerging economy”.

The RBZ deputy Governor said remittances from the estimated 3,5 million Zimbabweans living in foreign countries could play a bigger role in easing the liquidity crisis and facilitating growth in the domestic economy, hamstrung by liquidity crisis.

“The largest part of our remittances come from South Africa (33 percent), United Kingdom (24 percent) and United States (7 percent) and you can see that about half of our remittances actually come from (only) two countries (SA and UK),” Dr Mlambo said.

Export proceeds, though still and by far short of the levels required to eliminate liquidity crisis, account for the biggest portion of inflows into Zimbabwe at 62 percent, followed by money transfers 25 percent, loans 6 percent and income receipts 4 percent.

“What this is telling us is that when we formulate policies to tap into the Diaspora we need to know where the Diaspora is located. We need to make policies that make it attractive for those people to remit money back to the country,” he said.

This comes against the background that the whole African continent received about $33 billion from the Diaspora, which points to the fact that considering the large number of Zimbabweans in foreign countries, more can be done to increase the inflows. But even the African continent itself, except for Kenya, South Africa and Uganda, is not doing as much as it should considering that remittances to the continent are small by global standards and increasing slowly, expanding by a mere 2 percent in 2914. The need for more effective policies to tap into the potentially large liquidity reservoir of the Diaspora comes against the backdrop were the country is losing billions of dollars through imports, in the end leaving a negative liquidity flow balance.

“Imports become an outflow of liquidity. As long as we continue to import more than we export we will continue to have negative net inflows we actually have negative liquidity flows in that relationship,” the central bank deputy governor said.

Further, efforts to increase inflows, which have no strings attached unlike loans and other forms of assistance, come against a situation where the cost of money transfer in Zimbabwe is apparently too high and prohibitive, Dr Mlambo told delegates.

COMMENTS

WORDPRESS: 2
  • comment-avatar
    Richard Nembudziya 7 years ago

    Mr or Mrs Editor, you must be kidding. Not very long ago your Commander in Chief, Life President etc was frothing at the mouth (typical) at Zimbabweans who have been compelled by his rule to live in foreign countries. He went into a rage describing all these hapless Zimbabweans as idiots who just enjoy wiping the bums of old European women and men. There is something evidently pathologically wrong with this ruler and his courtiers. Shamelessly, the Zanu PF leadership now feels the diaspora is contributing significantly to cash inflows into the country even though the ruling party is staunchly opposed to them voting. This is as good as the Politburo undressing in First Street without a shred of shame. Tiri kutongwa nevanhu vanopenga, who should be in psychiatric wards. What a tragedy!

  • comment-avatar
    ntaba 7 years ago

    These diasporan remitters need to be sure to be sure that they carefully consider how to minimise any benefit to Zanu from these remittances. Effectively, Zanu made them into refugees and now Zanu still olds their family members to ransom and then to put salt in the wound the Commanding Murderer in Chief (and Thief) has the audacity to mock those who pay the bills for wiping bums around the world. The Murderer in Chief is well past his Best Before Date and indeed Expiry Date. The biography of the Murderer in Chief as installed by Margaret Thatcher and her cohorts will now be written starting with the Gukuruhnudi to include his well paid mujibas.