RBZ works to boost diaspora re­mit­tances

Chronicle (Zimbabwe) - - Business - Ti­nashe Ma­kichi Harare Bureau

THE Re­serve Bank of Zim­babwe has en­gaged a cen­tral bank from the re­gion to help it set up a diaspora re­mit­tance sys­tem aimed at pro­mot­ing sus­tain­abil­ity of the sec­tor, RBZ ex­change con­trol di­rec­tor Mor­ris Mpofu has said.

“Diaspora re­mit­tances re­main a crit­i­cal source of liq­uid­ity in the mar­ket and the RBZ will con­tinue to place ef­fec­tive sys­tems to en­cour­age use of for­mal chan­nels by cit­i­zens liv­ing out­side Zim­babwe.

“There­fore we’re cur­rently work­ing on set­ting up a diaspora re­mit­tances sys­tem and we’re in the process of en­gag­ing rep­utable in­sti­tu­tions on the Sadc re­gion in un­der­tak­ing this project,” said Mr Mpofu but de­clined to men­tion the iden­tity of the cen­tral bank.

It is es­ti­mated that about three mil­lion Zim­bab­weans are re­sid­ing in the diaspora and there has been grow­ing recog­ni­tion that mi­gra­tion if man­aged prop­erly can pos­i­tively con­trib­ute to­wards na­tional de­vel­op­ment.

The RBZ, how­ever, has come up with sev­eral pol­icy in­ter­ven­tions aimed at en­tic­ing the diaspora to use for­mal chan­nels in re­mit­ting funds back home.

He said re­mit­tances are a sta­ble and sig­nif­i­cant source of ex­ter­nal fi­nanc­ing for de­vel­op­ing coun­tries, over­shad­ow­ing of­fi­cial de­vel­op­ment as­sis­tance, pri­vate debt and port­fo­lio equity.

In­dia, Is­rael and Ethiopia have taken ad­van­tage of large in­flows of re­mit­tance to is­sue diaspora bonds to raise project fi­nance for pub­lic sec­tor in­vest­ment pro­grammes. Is­rael raised about $25 bil­lion within a 30 year pe­riod.

Given the im­por­tance of re­mit­tances to the coun­try, Mr Mpofu said the RBZ in close col­lab­o­ra­tion with other Gov­ern­ment de­part­ments will con­tin­u­ously re­view poli­cies that gov­ern re­mit­tances in­dus­try with a view of pro­mot­ing sus­tain­abil­ity of the re­mit­tances sec­tor.

“Re­gret­tably, it has not al­ways been easy for Zim­bab­weans out­side the coun­try to send money home. Many have been forced to send via cross bor­der buses and other risky and un­re­li­able meth­ods which re­sulted in many cus­tomers los­ing the money.

“Some­time this year a team of of­fi­cials went to In­dia with the aim of un­der­stand­ing how the In­dian sys­tem on diaspora re­mit­tances works. The visit does not nec­es­sar­ily mean that we will end up with a sys­tem ex­actly the same as that of In­dia. Yes there are some good things that we might end up in­cor­po­rat­ing but the trip to In­dia was just to un­der­stand how their sys­tems op­er­ate,” said Mr Mpofu.

He added that the RBZ’s new Diaspora Re­mit­tances In­cen­tives Scheme is set to re­duce the cost of diaspora re­mit­tances into the coun­try.

The DRIS, an ex­ten­sion of the cen­tral bank’s 5 per­cent ex­port in­cen­tives scheme that was an­nounced ear­lier this year will come into ef­fect on Oc­to­ber 1, 2016.

Mr Mpofu said the 5 per­cent in­cen­tive will ben­e­fit both the money trans­fer agent and the re­ceiver of the funds on the ba­sis of a 2 per­cent/3 per­cent split.

“DRIS is in line with the Re­serve Bank’s ef­forts to in­cen­tivise all earn­ers of for­eign cur­rency in the coun­try, it doesn’t mat­ter whether it’s an ex­porter of goods, ex­porter of ser­vices, re­mit­tances or any free flow of money into the coun­try.

“The five per­cent DRIS is go­ing to be shared be­tween the com­pany (Au­tho­rised dealer with Lim­ited Au­thor­ity) and the re­cip­i­ent. Three per­cent is go­ing to go to the re­cip­i­ent and 2 per­cent to the Au­tho­rised Dealer with Lim­ited Au­thor­ity (ADLA). This is to as­sist in re­duc­ing the cost of re­ceiv­ing and send­ing re­mit­tances.

“The mode of pay­ment is such that the ADLA is ex­pected to pre­fund the pay­out. That is why we’re giv­ing them the 2 per­cent, be­cause we know it’ll be on a re­im­burse­ment ba­sis. The Re­serve Bank pays the in­cen­tive on the ba­sis of money re­ceived,” said Mr Mpofu.

He said the five per­cent DRIS will be im­ple­mented on a re­im­burse­ment ba­sis which the RBZ will do “within 48 hours of the money hav­ing been sent.” DRIS was an­nounced by RBZ gover­nor Dr John Man­gudya ear­lier this month in the Mid-term Mon­e­tary Pol­icy. It is aimed to boost diaspora re­mit­tances into the coun­try, which have dipped of


Dr John Man­gudya

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