Remittances to Zim keep growing, govt and private sector trying to put them to productive use

I don’t think it’s debatable that it is not sanctions or climate change that have hit Zimbabwe the hardest in the past few decades. Rather, brain drain has been our […] The post Remittances to Zim keep growing, govt and private sector trying to put them to productive use appeared first on Techzim.

Remittances to Zim keep growing, govt and private sector trying to put them to productive use

I don’t think it’s debatable that it is not sanctions or climate change that have hit Zimbabwe the hardest in the past few decades. Rather, brain drain has been our biggest enemy and will continue to be so for the foreseeable future.

Yes, targeted sanctions, economic mismanagement, and climate change (droughts and cyclones) contributed to the brain drain.

Had it not been for Zimbabwe losing its brightest and most enterprising, we could have been better able to weather the storm. Recall that Rhodesia was under worse sanctions but it did better.

The only silver lining we have from losing millions of skilled labourers is that they continue to support the country. Zimbabwe would be in a much worse position if it weren’t for them.

In 2023, we earned US$7.2 billion from exports, which was a respectable 9.25% increase from 2022. The only fly in the ointment being that it was mostly minerals and commodities (80-90%).

Remittances

On the other hand, money sent by our children abroad reached US$1.8 billion. These remittances, as they are called, were equal to about 25% of our export earnings. That is a significant stat.

The Deputy Minister of Foreign Affairs and International Trade says we are on course to beat that 2023 figure. Q1 2024 remittances grew by 18%, from $420 million in Q1 2023 to $494 million.

With those kinds of funds flowing, it is no wonder we are spoilt for choice when it comes to remittance services. Right now, EcoCash is offering free transfers for the foreseeable future to entice users.

That could help divert some of the transfers that were entering the country in suitcases and under car seats to formal channels. Depending on whom you ask, remittances coming in via unofficial channels could be between 25% and 150% of official amounts.

One of the biggest reasons for the popularity of these unofficial channels is the cheaper transfer costs. If competition among remittance service providers leads to lower charges, we could see a corresponding increase in the use of formal channels.

Productive use of remittances

Zimbabwe is a small economy, and if the $1.8 billion were used to boost economic productivity, we would be golden. So, we find both the private sector and the government trying to help the diaspora make that transition.

We first talked about Jamboo around this time last year, saying,

The Jamboo guys believe remittances from Europe to Africa for bread and butter issues are spoken for. As is the flow of funds to fund Diasporans’ own projects and charitable donations.

Jamboo sees a gap when it comes to remittances for institutional investment. They will be looking to fill that gap. Allowing diasporans to invest in other organisations in Africa.

Jamboo will be involved to some degree in structuring the investment opportunities that will be presented on their platform.

The government has established a Working Party of Senior Officials on Diaspora Engagement to handle diaspora inquiries and issues. They aim to coordinate and advance the interests of the diaspora in the country’s socio-economic development.

The government is also encouraging the formation and registration of diaspora associations through Zimbabwean Embassies. These associations are meant to facilitate better information flow and collective efforts.

The government is also profiling the diaspora. They say profiling is crucial for effectively integrating them into national development programs. This initiative helps the government understand the demographics, locations, and concerns of Zimbabweans abroad.

The International Organization for Migration (IOM) has helped in that effort.

Good idea but …

No one could argue that putting remittances to productive use is a good idea. The biggest challenge is that the foreign countries our relatives live in are struggling too. While not to Zimbabwe’s extent, diasporans aren’t exactly swimming in moolah.

Combine that with the struggling relatives they are sending money to who need help with daily meals, and you can see how much of the remittances are used for basic necessities.

The IOM says that 72% of the diaspora community in South Africa is supporting three or more family members in Zimbabwe. Indeed, remittances are mostly used for household consumption.

For most diasporans and their families back home, there just isn’t any surplus to channel towards ‘productive use.’

There are a few with those surpluses, though, and so the effort is worthwhile.

Voting rights

The government will never go for this, but considering that diasporans are playing such a huge role in our economy, should they not get a chance to vote for the country’s leaders?

I know it won’t happen, but I’m just throwing it out there. Maybe if the diasporans had a say in the dealings of the country, they would have a better incentive to invest in it. Food for thought, I guess.

The Deputy Minister says,

It would be remiss of me if I fail to acknowledge the ever-growing contribution of our diaspora to the country’s socio-economic development through social and financial remittances.

Well, it would be remiss of you not to reward said Diasporans with a say in the country’s future.

Also read:

The post Remittances to Zim keep growing, govt and private sector trying to put them to productive use appeared first on Techzim.

What's Your Reaction?

like

dislike

love

funny

angry

sad

wow