HARARE: Zimbabwe’s Diasporans brought in over US$1 billion during the 17 months to May this year, bailing out a liquidity-starved economy that had international remittances amounting to US$2,5 billion during the period, the Financial Gazette can report.
Statistics from the Reserve Bank of Zimbabwe (RBZ) show that approximately US$1,2 billion was injected into the economy by Zimbabweans in the Diaspora. This is enough to fund nearly 40 percent of the country’s budget, pegged at US$3,5 billion for the current year.
The amount is also almost at par with contributions to gross domestic product (GDP) by the country’s mining industry, the single largest contributor to GDP whose earnings amounted to close to US$1,9 billion last year.
Information provided by the RBZ last week indicates that international remittances into Zimbabwe increased significantly from the US$1,76 billion recorded last year to US$2,5 billion, representing a 13 percent growth.
This year alone, between January and May 31, Diasporans remitted approximately US$740,6 million.
While the figures may indicate Diasporans’ confidence in the use of formal channels to remit funds, the amount remitted might be much higher given that some funds come into the country through informal channels, especially from Zimbabweans resident in neighbouring countries such as South Africa, Botswana, Mozambique, Zambia and Namibia.
This means, Zimbabweans living abroad, who left the country over the last decade or so, to escape a biting economic crisis — characterised by world record inflation and high unemployment — are helping to sustain the Zimbabwean economy.
It is understood that between three and four million of the country’s nationals have left Zimbabwe to seek employment mainly in South Africa and other countries in southern Africa, Europe, the Americas, Canada, Australia and Asia, as the economy progressively declined.
Diasporans have become an important class of investors and a vital economic cog not only in resuscitating the ailing economy but in national development.
“In 2014, international remittances into Zimbabwe amounted to about US$1,76 billion. This figure includes US$838 million from the Diaspora. In 2015, up to May 31, 2015, international remittances amounted to about US$740,6 million. This figure includes US$346,8 million from the Diaspora. The average growth rate of the international remittances is 13 percent,” said RBZ in an email response to the Financial Gazette’s enquiries.
International remittances comprise inflows from international non-governmental organisations and remittances by individuals in the Diaspora.
Diaspora remittances have a direct impact on poverty reduction, since they tend to flow directly to households and are used primarily for basic needs such as food.
Finance Minister, Patrick Chinamasa, recently said Diaspora remittances played a key role in many countries.
He said Zimbabwe needed to come up with ways of harnessing these resources.
“Most countries in the world, including our regional neighbours, are benefiting immensely from financial transfers by their nationals in the Diaspora. Zimbabwe’s Diasporans are also desirous to contribute towards the development of their country,” said Chinamasa.
“Many Zimbabwean professionals, artisans and other skilled persons who left the country, and may not come back soon, will want to invest and contribute to the country’s development process,” he said.
He said government was considering a number of ways of encouraging Diasporans to get involved in helping develop the country.
“I have in mind, to fund some of the small hydro-electric schemes, issuance of Diaspora Bonds, and for Diasporans to participate in their economy through some of the opportunities arising out of the indigenisation policy programme,” Chinamasa recently told Parliamentarians.
“Further, to harness the Diaspora potential, government will among other things promote investments by the Diaspora through tax and import duty incentives for qualifying investments in the manufacturing and other capital intensive industries.”
Presenting the 2015 National Budget, Chinamasa, said government recognised the “formidable role played by the Diaspora in national development” and as such, highlighted the need to establish a National Diaspora Policy.
CBZ Bank, the country’s biggest bank by assets and deposits, issued its maiden US$68 million Diaspora bond in 2012 which expired in April last year. The bank plans to issue its second US$200 million bond, backed by Afreximbank, this year.
According to Chinamasa, Afreximbank will avail a six month, bridging finance gap of US$100 million towards the bond to provide funds for companies requiring urgent capital injection.
In the 1990s, the Diaspora mitigated the impact of Asian economic crisis with China and India coming up with three different business-oriented models in enlisting Diaspora contributions to development.
China invented a “brain trust” model designed at attracting its human capital in the Diaspora by opening investment trade opportunities through its overseas Chinese communities.
India’s Diaspora policy is multi-pronged, pursuing direct investment, portfolio investment, technology transfer, market opening and out-sourcing opportunities.
However, some analysts said unlike other countries where Diaspora remittances have significantly contributed towards economic development, the situation in Zimbabwe is different because most people working outside the country had low paying jobs.
