Money transfer firms cash in on Covid-19
Zimbabwean money transfer companies are flourishing on the back of an increase in digital remittances as the global coronavirus pandemic boosts electronic money transfers.
The remittance companies are cashing on the Covid-19 pandemic as many people in the diaspora have switched to formal channels of sending money back home.
There has also been a phenomenal growth in internal forex transfers spurred by coronavirus-induced restrictions on inter-city travel.
It is estimated that about three million Zimbabweans are living in the diaspora, the majority in South Africa who previously used informal channels like bus or truck drivers to send money to their loved ones back home.
The closure of borders by Zimbabwean and South African authorities as a measure to curb the spread of coronavirus left people with no option but to use formal agencies to send money.
“Generally, there has been a significant increase in volumes because people are now using formal channels,” chief executive of Access Finance, which owns money transfer firm Access Forex, Mr Ray Chigogwana said in an interview on Tuesday.
“As for our business, the growth was much higher than the market growth because we are relatively new in the market but that generally mirrors the performance of the entire industry.”
Some industry players said money transfer agencies have immensely benefited from the pandemic as the majority of the transactions were being done through formal channels.
“The volumes are high and confidence is high as well . . . going forward, we feel transfer agencies would be the most viable option even if the travel restrictions are to be relaxed,” said an executive with a local company.
During the first half of the year, diaspora remittances are estimated at US$746,9 million, compared to US$288,7 million received during the same period last year according to the Treasury and remittances are projected to reach US$1,3 billion by year end.
“Personal transfers from Zimbabweans in the diaspora are expected to remain steady and resilient as the economies in key source markets recover from the Covid-19 induced slowdown, allowing them to invest in assets back home”, finance and Economic and Development Minister Professor Mthuli Ncube said while presenting the 2021 budget
review statement.
Diaspora remittances and other transfers, which constitute the secondary income account are projected to continue driving the current account balance as was the case last year, Ncube Minister said.
In the last several years, remittances overtook Foreign Direct Investment (FDI) as the largest external capital source in developing economies.
The forecast for global FDI flows remains bleak, with the United Nations Conference on Trade and Development (UNCTAD) having foreseen that these flows contracted by up to 40 percent in 2020.
When the Covid-19 pandemic struck, the World Bank projected dire declines in remittance flows to low and middle-income countries. However, the economic support via remittances proved resilient and remittance flows have held up.-herald.cl.zw
