WHEN Nyarai Goredema lost her job as a manager with Harare-based Msasa Steel in June, she sold some of her possessions and put her home on the market. When no one offered to buy it, she turned to her son who works at a bank in neighboring South Africa for support.
“It’s harsh on me and on him,” the 48-year-old widow, who lives on the US$500 to US$1,000 her son sends her each month, said by phone. “In all my life it has never been this tough.”
About 3 million of Zimbabwe’s 13 million people have left the country in the past 15 years as policies pursued by President Robert Mugabe’s government have driven much of the southern African nation to ruin. The money they send to those left behind is playing an ever-increasing role in shoring up an economy plagued by deflation and a jobless rate estimated at 95% by the National Association of Non-Governmental OrganiSations.
Zimbabweans living abroad are expected to send home US$2 billion this year, up from US$1,8 billion last year, central bank Governor John Mangudya said Aug. 29.
Remittances equated to about 13% of gross domestic product in 2014, outstripping all export income besides minerals, which the Chamber of Mines says earned the country US$1,85 billion. An increased use of electronic money transfers is being driven by the proliferation of smartphones and Internet access.
”A substantial percentage of the population would be severely constrained without remittances,” John Robertson, an independent economist based in Harare, said by phone.
“The irony is that people driven to greener pastures outside the country are the same people, to a significant extent, who keep ordinary Zimbabweans going within the country.”
While the central bank recorded remittances of US$3,5 billion entering Zimbabwe between 2009 and 2014, its data excludes undeclared payouts brought in by so-called runners — minibus taxi drivers who ply routes between South Africa and Zimbabwe. Based on a trust system, Zimbabwean migrants hand over cash to be delivered to relatives back home.
The runners, who also ferry groceries, kitchen appliances and other goods, charge fees of between one percent and 10%, and haggling is standard practice, Nixon Moyo, who operates the route between Johannesburg and Harare, said in an Oct. 28 interview.
While the money-transfer market has long been dominated by Englewood, Colorado-based Western Union Co., Dallas, Texas-based MoneyGram International Inc. and London-based Mukuru.com, the market is opening up.
New entrants include Econet Wireless Zimbabwe Ltd., the nation’s largest mobile-phone operator, which in partnership with U.K.-based transfer service WorldRemit Ltd., is offering a service that enables Zimbabweans living abroad to send money home through Econet’s 13000 agents.
Mama Money, a Cape Town-based money transfer company has about 10000 regular customers who send money to Zimbabwe. It charges 5% commission, with all transactions taking place online or by mobile phone.
“New technology shouldn’t just make it easier, it should also make it much cheaper” to transfer cash, Mama Money spokesman Matt Coquillon said by phone. “The aim should be to bring down commission rates to as near zero as possible and we don’t see why that can’t happen.”
Sub-Saharan Africa is the world’s most expensive region to send money home, with average commission rates of 9.8 percent comparing with a global norm of 7,5%, according to the World Bank.
The increase in competition, falling costs and new technology are a boon for Goredema.
”It’s much easier now because my son can send money by phone,” she said.
“He doesn’t even need to go into a bank or post office like in the old days and I can get my money on my phone which also makes life easier.”-Bloomberg