Last week, Reserve Bank of Zimbabwe (RBZ) Deputy Director William Mamhimanzi caused an uproar when he said the bank should convert diaspora remittances to the local ZiG currency.
Speaking at an event, Mamhimanzi said diaspora remittances are fuelling the informal sector. He said it might be time for the Central Bank to withhold the diaspora remittances and pay recipients in local currency.
What did The RBZ Deputy Director Say?
Mamhimanzi commented:
"Where does the informal sector get its money from? One big source of this money is your remittances. When someone receives money from external sources, from relatives, they immediately get that money in hard currency. And once people get that hard currency in cash, you know it's not going to the bank. It goes into Mbare Musika, it buys steel and it goes wherever.
"So we need to find ways of tapping that money to make sure that it doesn't leave the bank. It doesn't leave the remittance institution, or it leaves as local currency at some point."
Members of the public reacted with anger to the comments, as they accused authorities of plotting to fleece "the poor."
Read More: Econet Opens First Free Remittance Corridors To Zimbabwe
Will The Reserve Bank of Zimbabwe (RBZ) Convert Diaspora Remittances To ZiG?
The Governor of the central bank, Dr John Mushayavanhu, released a statement to clarify the contentious issue.
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He said the Reserve Bank of Zimbabwe will not convert diaspora remittances to the local currency:
"The Reserve Bank of Zimbabwe has noted the circulation of a video on social media whose discussion was focused on strategies for formalization of the informal sector and the resultant concerns from the market regarding misconstrued plans to review the current Diaspora Remittances Policy.
"Accordingly, the Reserve Bank wishes to put it on record that there are no plans to introduce a New Diaspora Remittances Policy. In terms of our current Exchange Control regulations, Diaspora remittances are treated as free funds, which recipients can receive in foreign currency and change freely at their instance and preferred licensed agencies, as is the best practice globally.
"The Reserve Bank would like to assure the public and all stakeholders that recipients of diaspora remittances will NOT be FORCED to change their free funds at the point of collection and at any other time."
How Much Does Zimbabwe Get From The Diaspora?
Dr Mushayavanhu acknowledged that diaspora remittances account for 17% of the total foreign currency receipts.
In 2023, diaspora remittances increased by 16% to US$1.873 billion from US$1.617 billion in 2022. Zimbabwe's total foreign currency receipts stood at US$11 billion last year.
The Deputy Minister of Foreign Affairs and International Trade, Sheila Chikomo, said the Q1 2024 remittances jumped by 18% to US$494 million from US$420 million in Q1 2023.
The 2022 Zimbabwe census found that there were 908,914 Zimbabweans in the diaspora. However, the population is believed to be above 3 million.
