Zimbabweans based in SA major source of remittances, RBZ

SOUTH Africa dominated as major source of diaspora remittances to Zimbabwe, constituting 40 percent of total receipts in 2022, according to Reserve Bank of Zimbabwe (RBZ).

Remittances from the Southern neighbour totaled US$583 million, making it the leading source of diaspora remittances, RBZ Governor Dr John Mangudya, revealed on Thursday last week in his monetary policy statement.

United Kingdom at US$361, 7 million and the United States of America (USA) at US$159 million ranked second and third on the list of remittances source countries.

Australia was fourth on the list with US$89 million, which is six percent of the diaspora remittances while Canada and Botswana contributed 3 percent each having after contributing US$41, 3 million and US$39, 6 million sequentially.

Germany, Ireland, New Zealand, and Malawi contributed one percent apiece in the period.

According to RBZ, international remittances amounted to US$2, 8 billion in 2022, a 16 percent growth from US$2, 4 billion received in 2021. Out of this amount, diaspora remittances contributed US$1, 66 billion from US$1, 43 billion received in the same period prior year.

About 88 percent of the receipts went through money transfer agencies, while 12 percent used banking channels.

It is, however, arguable that this is not reflective of total remittances received in the year as some of the money still find its way into the country through informal channels.

Economist, Dr Prosper Chitambara, noted that the continued growth of diaspora remittances in the last few years could be attributed to migrations post 2021 given the rise in labour exports.

“Covid-19 was a major driver to this growth as nurses, doctors, and other skilled professional Zimbabweans left the country for Europe, the USA, and Australia no wonder why our remittance inflows have been on an upward trajectory for the past few years,” said Dr Chitambara.

More could be done to harness the growing inflows into the country indicating that Zimbabwe can follow the steps of Ethiopia, Nigeria, and Philippines which issued diaspora bonds.

“The diaspora represents a huge opportunity especially in bridging the huge finance gap in terms of infrastructure financing, I think we can do more with the diaspora, I know a number of countries that have been issuing diaspora bonds.

“There is more that can be done to harness and leverage the potential of the diaspora to drive growth and development back home,” said Dr Chitambara.

It is estimated that circa two million Zimbabweans live in the diaspora, with neighbouring South Africa being the most popular destination.

Zimbabwe has since 2019 been recording an increase in the number of remittances from the diaspora.

Another economist who preferred anonymity weighed in saying favourable transfer charges were significantly promoting the use of formal channels to send money adding Covid-19 induced lockdowns had also promoted the use of formal channels.

“Increase in remittances is a mixture of a number of events as more people are now using formal channels since the advent of the Covid-19 pandemic, which resulted in lockdowns, lowering human movement from source countries.

“Money Transfer Agencies have also been reducing the cost of transferring money between countries due to more competition and people now see them as more secure,” said the Economist.-ebusinessweekly