DIASPORA remittances are now the second largest source of liquidity in the country after exports, reaching US$830 million in the first half of 2016.
Fidelity Mhlanga/Hazel Ndebele
In June, diaspora remittances were pegged at US$157 million and estimates are that they will reach US$1,5 billion by year-end.
Given the significance of the diaspora remittances, government is now exploring the option of issuing diaspora bonds to entice the diaspora community to inject more money into the economy.
“From January to June we have received US$830 million diaspora remittances and this includes those coming through non-governmental organisations, which have contributed about US$440 million,” Reserve Bank of Zimbabwe (RBZ) deputy governor Kupukile Mlambo told the Zimbabwe Independent in an interview last week.
Official diaspora remittances have been growing from US$300 million in 2009 to more than US$800 million in 2014. In 2015 remittances from the diaspora were US$935 million, which is more than what the country gets through foreign direct investment (FDI).
FDI inflows tumbled from US$545 million in 2014 to US$421 million last year, which represents a 23% drop, as the country struggles to attract meaningful investment due to policy inconsistency surrounding the indigenisation policy and high levels of corruption among other bottle necks.
According to the Economic Development in Africa Report 2016, launched by Macro-Economic Planning and Investment Promotion permanent secretary Desire Sibanda in the capital last Friday, the government will engage Zimbabweans living abroad to raise funds.
“The RBZ governor John Mangudya is set to meet with the diaspora community in the United Kingdom to explain and convince Zimbabweans in that country to invest in their country through diaspora bonds,” Sibanda said.
“Diaspora bonds are very important for our economy and we are very happy that the national diaspora policy pushed by our ministry was recently approved by cabinet so that we can engage our diaspora community.”
He said Mangudya’s trip will clarify further to the diaspora community that when they invest their money in foreign currency they will be paid back in foreign currency and not in bond notes.
“Engaging the diaspora community is meant to create confidence in Zimbabwe and assure those Zimbabweans out of the country that diaspora bonds will also work in their favour,” Sibanda said.
He said an estimated two million Zimbabweans are living abroad, with the majority in South Africa and the United Kingdom.
Sibanda said a large share of diaspora savings are held in bank deposits.
“Deposits held in host-country banks currently receive near-zero interest rates therefore migrant workers may find it attractive to invest their savings in other outlets or vehicles such as diaspora bonds,” he said.