Di­as­pora monies drop 25 per­cent

Chronicle (Zimbabwe) - - Business - Oliver Kazunga Se­nior Busi­ness Reporter

DI­AS­PORA remit­tances dropped by 15 per­cent in the first half of the year to $387,9 mil­lion due to rapid cur­rency de­pre­ci­a­tion in source mar­kets against the United States dol­lar.

The Gov­ern­ment has since moved to ex­pe­dite the im­ple­men­ta­tion of the Na­tional Di­as­pora Pol­icy to pro­mote the flow of funds through the for­mal fi­nan­cial sys­tem.

Di­as­pora remit­tances are a ma­jor source of liq­uid­ity in the coun­try af­ter ex­ports.

In his mid-term fis­cal pol­icy state­ment yes­ter­day, Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter Pa­trick Chi­na­masa said the use of in­for­mal trans­fers also contributed to the de­cline.

“Dur­ing the first six months of 2016, Di­as­pora remit­tances amounted to $387,9 mil­lion, com­pared to $457,8 mil­lion re­ceived dur­ing the cor­re­spond­ing pe­riod in 2015.

“How­ever, part of the de­cline might also be re­flec­tive of in­creased use of in­for­mal trans­fer chan­nels,” he said.

As part of mea­sures to har­ness Di­as­pora remit­tances, by De­cem­ber 2015, the Gov­ern­ment had li­censed 34 money trans­fer agen­cies.

The min­is­ter said the an­tic­i­pated de­cline in Di­as­pora remit­tances be­yond 2016 would ex­ert pres­sure on the coun­try’s bal­ance of pay­ments.

“It’s there­fore, vi­tal that we ex­pe­dite the im­ple­men­ta­tion of the Na­tional Di­as­pora Pol­icy to pro­vide an en­abling frame­work that pro­motes the flow of the funds through the for­mal fi­nan­cial sys­tem,” he said.

Chi­na­masa noted that the pri­vate sec­tor off­shore ex­ter­nal loans have been an in­ter­nal in­te­gral source of liq­uid­ity in the econ­omy since the adop­tion of a mul­ti­c­ur­rency sys­tem in Fe­bru­ary 2009.

The loans, he said, have largely been utilised for work­ing cap­i­tal and cap­i­tal­i­sa­tion.

“Dur­ing the pe­riod from Jan­uary to June 2016, the Re­serve Bank of Zim­babwe ap­proved and reg­is­tered a to­tal of 156 pri­vate sec­tor loan fa­cil­i­ties to­talling $976,4 mil­lion. The agri­cul­ture sec­tor has the high­est con­tri­bu­tion of 49 per­cent, which is mostly buoyed by the to­bacco sec­tor,” said the min­is­ter.

Chi­na­masa also said de­pen­dency on loan fi­nanc­ing as op­posed to eq­uity fi­nanc­ing to fund busi­ness in­vest­ments was of­ten symp­to­matic of in­vestors’ mit­i­ga­tion of per­ceived un­favourable in­vest­ment cli­mate and risks.

“This is also true for in­vestors who re­sort to us­ing the En­gi­neer­ing Pro­cure­ment Con­struc­tion model as op­posed to eq­uity in­vest­ment,” he said. — @okazunga

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