Zimbabwe has recorded a 33 percent increase in Diaspora remittances to US$466,2 million as at July 31, 2020 compared to US$349,7 million at the same time last year, according to Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya.
This is despite the adverse impact of the Covid-19 pandemic, which has crippled the global economy and rendered millions of migrant workers jobless.
The World Bank had predicted that remittance inflows to Sub Saharan African countries will drop by 23,1 percent from $48 billion in 2019 to $37 billion in 2020 in the wake of the Covid-19 economic crisis.
Zimbabwe is among the leading recipients of remittances in the Comesa region alongside Egypt, Kenya, Tunisia and DR Congo.
The country also leads in terms of contribution of remittances to Gross Domestic Product at with 13,5 percent, according to the Comesa secretariat.
Dr Mangudya told journalists during a joint online press conference hosted by the Zimbabwe Revenue Authority (Zimra) and the Apex Bank yesterday that the Diaspora community has greatly assisted the economy by injecting more foreign exchange in the first seven months of the year.
“Over the past months, despite Covid-19, the amount of money that is coming from the Diaspora to Zimbabwe has never gone down,” said the Governor.
“The first seven months of the year (January to July) we received US$466,2 million compared to US$349,7 same time last year. This is a 33 percent increase and these are the funds we use in the country.
“This is a positive growth and with this growth we can’t say ‘don’t use that money’. So, when we put S.I. 185 of 2020 (use of free funds and forex trading) we were recognising that our people are bringing in money and we call it ‘free funds’, and we are saying businesses should pay tax using the same currency when trading.”
Dr Mangudya reiterated that the green-light to use foreign exchange when trading locally does not mean the country is returning to dollarisation.
Instead, he said Zimbabwe was in the medium term dollarised category of economies like DRC and Zambia, which use both local currency and foreign exchange in domestic trading.
In 2019, Diaspora remittances grew by 2,6 percent to US$635 million from US$619 million recorded in 2018.
Although the country incurred negative inflows in the first eight months of last year, the month of September marked a positive shift with US$52,5 million flowing in compared to $46,4 million in 2018, which was a 13 percent variance.
The positive trajectory was maintained in October and November with December 2019 recording the highest monthly growth of 27 percent to US$67,5 million from US$53 million.
International remittances, which comprise transfers by international organisations for humanitarian assistance and the Zimbabwean Diaspora, are one of the critical sources of foreign exchange in the economy.
There are, however, suspicions that the country could be receiving millions in remittances sent through informal channels.
This is evidenced by the rampant operations of illegal money transfer agencies and use of cross-border transporters.
Meanwhile, the total foreign currency receipts for the period January to December 2019 amounted to US$6,88 billion, compared to US$7,21 billion received during the same period in 2018. This represented a 4,4 percent decrease in foreign currency supply.
One of the major forex earners, gold, suffered a decline of 17 percent in terms of deliveries to Fidelity Printers and Refiners at 27,66 tonnes in 2019 compared to 33,29 percent in 2018.