ZIMBABWE received the largest remittances in southern Africa, underpinned by high migration of citizens who fled a two decade-long economic crisis, the latest African Development Bank (AfDB) data shows.
Remittances have been a major source of foreign currency and economic development in the southern African country with the Reserve Bank of Zimbabwe noting that inflows generated more forex than tobacco and gold.
In its Southern Africa Economic Outlook report, AfDB acknowledged that remittances had been an important source of income and social protection in Zimbabwe after de-industrialisation crippled the economy and forced over three million people to seek economic refuge in the diaspora.
It is estimated that over two million Zimbabweans moved to South Africa.
Bankers, engineers, teachers, lawyers, mining experts and health personnel relocated to Australia, the United Kingdom, the United States of America, Namibia and Botswana.
“At the country level, Zimbabwe had the highest amount of remittances between 2018 and 2019, followed by South Africa, Madagascar and Lesotho,” AfDB said.
“Large remittance inflows to these countries also reflect outward economic migration. The bulk of remittances in southern Africa originates from countries within the region, most notably South Africa, making it an important “source country” for remittances. Moreover, reducing the costs of remittances and maximising their impact on development is a key to the region’s socioeconomic development.”
Remittances boosted the economy between 2018 and 2020.
“Countries that saw a significant decline in their economies in 2019 include Mozambique, São Tomé & Príncipe, Zambia and Zimbabwe. In 2019, Zimbabwe was the worst performer, with a contraction of 8,4% due to austerity measures implemented through the Transitional Stabilisation Programme 2018–2020, drought and Cyclone Idai, slow progress on structural reforms, policy inconsistencies, a stifling business environment emanating from supply-side constraints and currency challenges,” AfDB said.
According to the Reserve Bank of Zimbabwe, diaspora remittances grew by 58 % to US$1 billion last year.
In the recent Monetary Policy Statement, Central Bank governor John Mangudya said in 2019 remittances stood at US$635 million.
The growth registered in 2020 was despite blanket lockdowns rolled out by governments across the world to fight Covid-19.
Many companies in advanced economies where Zimbabweans are based were equally affected by the pandemic.
But some governments chipped in by taking over the payrolls of corporations to avoid devastating bankruptcies of the private sector.
This helped to keep many Zimbabweans based in the first world to keep their jobs and send money back home.
Some Zimbabweans resorted to savings and continued remitting funds to help millions who faced financial challenges back home after company closures.
However, the central bank said monetary policy reforms also allowed the flow of remittances through the formal banking system.
In total, the country received US$1 billion last year, compared to US$635,7 million in 2019.
“As at 31 December 2020, total international remittances amounted to US$1,7 billion, an increase of 43% from US$1,2 billion recorded during the same period in 2019,” Mangudya said.
“In the year 2020, diaspora remittances amounted to US$1 billion, a 58% increase from previous year of US$635,7 million. The increase in diaspora remittances is mainly due to liberalisation of the use of free funds in the country and improved channelling of remittances through formal channels.
“International remittances received through the normal banking system on behalf of international organisations amounted to US$647,8 million in year 2020, a 26% increase from previous year of US$519,4 million.”