Zim received US$1bn in remittances last year
ZIMBABWE received US$1 billion in diaspora remittances last year, an increase of 58 percent from prior year as Covid-19 travel restrictions forced people to send money through formal channels.
Remittances from people living abroad are an important source of foreign currency for the country which heavily relies on foreign earnings from commodities. Last year, foreign earnings from mineral were 73 percent of total exports.
About three million Zimbabweans are estimated to be living abroad, with the majority in neighbouring South Africa and these often use unofficial channels like buses to send money back home.
Zimbabwe and South Africa closed the borders early last year as part of measures to curb the spread of the deadly coronavirus. Even when the two countries eased the restrictions, travel remained subdued.
“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,” Reserve Bank of Zimbabwe governor Dr John Mangudya said in the 2021 Monetary Policy Statement released yesterday.
Available evidence suggests that, all things considered, poor households receiving remittances tend to have better living conditions than their counterparts without access to this source of income.
According to the World Bank, remittances by African migrants could support between 10 to 100 people, by boosting household income and spending on healthcare and education.
Thus remittances play an important role in poverty reduction and improving human development.
At a macro level, flows of remittances improves the balance of payments and bolster a country’s foreign exchange reserves.
International remittances received through the normal banking system on behalf of international organisations amounted to US$647,8 million in year 2020, a 26 percent increase from previous year of US$519,4 million.
The total foreign currency receipts for 2020 amounted to US$6,3 billion compared to US$5,5 billion received during the same period in 2019, representing a 14,9 percent increase in foreign currency supply.