Zimbabwe: Diaspora Remittances Expected to Double

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The Herald (Harare)

8 July 2008
Posted to the web 8 July 2008

Harare

FOREIGN currency remittances from Zimbabweans living abroad excluding hand-to-hand transfers are expected to double this year from U.S.$361 million last year, according to projections from the International Fund for Agricultural Development.

The country has an estimated four million people in the Diaspora, a considerable number of them in the region and last year's remitted figures made up seven percent of the year's gross domestic product (GDP). Diaspora remittances have played an important part in poverty alleviation while at the same time contributing to the low levels of consumer resistant.

There are longer queues at the Western Union than they were a year ago, as many are dependent on foreign funds primarily to meet immediate family needs. Zimbabwe National Chamber of Commerce economist Mr Tichaona Mudzviti said that at present the economy was being driven by Diaspora remittances as salaries fall below inflation.

"Consumers are quickly adjusting to the high level of price increases because they have the back-up of the greenback." The country's consumer watchdog - Consumer Council of Zimbabwe - has become silent in protecting consumers against price increases while at the same time the National Incomes and Pricing Commission has adopted a more flexible approach to pricing.

Independent analyst Mr Chengetai Chigwida said consumer resistance in high inflation is at zero percent because consumers had adopted a dual set mind - "to buy goods now or delay and buy at a higher price tomorrow and to resist now and fail to find the goods tomorrow". Resultantly, Mr Chigwida said, while there could be consumer anger on the surface people are rushing to buy in fear of further increases but that had all been made possible by Diaspora remittances.

He said there was need to harness the inflows to use for economic development because currently the bulk of the money was going to consumer goods. "Despite their importance, little is known about such financial flows in the direction of African countries. Several grey areas persist regarding the market structure or the utilisation of these resources," Mr Chigwida said.

Mr Mudzviti said remittances fall in two parts: those meant for the household consumption of the beneficiaries, especially food, which accounts for 85 percent of the total inflows and those meant for investment in an economic activity like the stock market or real estate.

Money transfer companies such as MoneyGram and Western Union process the bulk of the inflows, which are then used on the informal market or the property sectors. The two players have developed co-operation strategies with banking agencies, the post office and other institutions.

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