In­cen­tives for di­as­pora money

Chronicle (Zimbabwe) - - Business - Oliver Kazunga

THE Re­serve Bank of Zim­babwe (RBZ) has stepped up ef­forts to im­prove liq­uid­ity in the coun­try by in­tro­duc­ing an in­cen­tive scheme at a level of be­tween 2,5 per­cent and five per­cent for di­as­pora re­mit­tances com­ing through the for­mal sys­tem.

This fol­lows con­cern by the Gov­ern­ment that di­as­pora re­mit­tances in the first half of the year de­clined by 13 per­cent to $397,3 mil­lion com­pared to $457,9 mil­lion re­ceived dur­ing the cor­re­spond­ing pe­riod in 2015.

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

Pre­sent­ing the Mid-Term Mone­tary Pol­icy State­ment yes­ter­day, RBZ Gover­nor Dr John Man­gudya said:

“In view of the crit­i­cal role of Di­as­pora re­mit­tances in the econ­omy and in or­der to en­hance the re­mit­tance of such funds, the bank shall be ex­tend­ing the ex­port in­cen­tive scheme at a level of be­tween 2.5 and five per­cent to di­as­pora re­mit­tances in­clud­ing any form of pri­vate un­re­quited trans­fers on funds re­mit­ted to Zim­babwe through nor­mal bank­ing chan­nels with ef­fect from 1st Oc­to­ber 2016.”

The de­cline in di­as­pora re­mit­tances has been at­trib­uted to rapid cur­rency de­pre­ci­a­tion in source mar­kets against the United States dol­lar.

“The con­tin­ued ap­pre­ci­a­tion of the US$ against re­gional currencies has also af­fected the dol­lar de­nom­i­nated value of re­mit­tance in­flows, par­tic­u­larly from South Africa, which have over the years been a sig­nif­i­cant source of for­eign cur­rency in the coun­try.

“The weak­en­ing of the South African rand against the US$, im­ply that Zim­bab­weans who are in South Africa are no longer in a po­si­tion to send the same amount of money in US$ they used to re­mit back home. The rand value re­mit­tances have gone down in US$ terms,” said Dr Man­gudya.

Since the lib­er­al­i­sa­tion of the econ­omy in Fe­bru­ary 2009, the econ­omy has been faced with liq­uid­ity crunch and this has had a knock-on ef­fect in stim­u­lat­ing pro­duc­tiv­ity in the man­u­fac­tur­ing sec­tor.

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

While pre­sent­ing the mid-term fis­cal pol­icy state­ment last week, Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter Pa­trick Chi­na­masa pointed out that the Gov­ern­ment would ex­pe­dite the im­ple­men­ta­tion of the Na­tional Di­as­pora Pol­icy to pro­mote the flow of funds through the for­mal fi­nan­cial sys­tem

It is feared that the an­tic­i­pated de­cline in di­as­pora re­mit­tances be­yond 2016 is likely to ex­ert pres­sure on the coun­try’s bal­ance of pay­ments. — @okazunga

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