Diaspora remittances have fallen some 100 percent to US$900 million this year despite an increase in registered money transfer agencies.
Finance and Economic Development Minister Patrick Chinamasa told the recent Zanu-PF 6th National People’s Congress that he estimated remittances from Zimbabweans living abroad to reach nearly US$900 million by year-end.
The figure is expected to further decline to US$840 million in 2015, according to the 2015 National Budget.
This is a massive drop from the US$1,8 billion send home in 2013 and from the US$2,1 billion remitted in 2012.
It was not immediately clear what has led to the decline in remittances.
However, recent trends have shown people are moving away from formal channels due to rising money transfer costs. This means significant sums could be flowing in informally.
And in his National Budget presentation, Minister Chinamasa said the decrease could be largely due to the “projected slowdown of the South African economy, where many migrant Zimbabweans are working”.
For the period January to October 2014, international money transfers amounted to US$1,42 billion of which Diaspora remittances were US$685 million while international organisations such as NGOs accounted for US$740 million.
Apart from the traditional Western Union and Moneygram facilities, more formal channels for sending money have been established this year such as Zimpost’s NettCash.
Of note are mobile phone operators partnering money transfer organisations, making it easier for Zimbabweans to receive money through their phones.
The biggest mobile operator Econet, partnered with WorldRemit to allow easier Diaspora remittances. Telecel partnered with Mukuru to enable their subscribers to receive money from South Africa.
Although Telecel’s communications and branding manager Mr Obert Mandimika could not reveal the amount sent through the facility, he said “there has been significant growth month on month from both volume and value perspectives, which is in line with our projections at launch of the service”.
He added that the mobile operator was working with partners in other countries such as Botswana, the UK, the US, Canada and Australia to tap into those markets.
“We are basically mirroring where most of our people in the Diaspora are located to enable them to remit funds to friends and family here at home easily and conveniently,” said Mr Mandimika.
Zimbabwe’s largest retailer, OK Zimbabwe, is in partnership with FNB in Zimbabwe Money Transfer Service to allow Zimbabweans in South Africa to send money back home. The retailer said more efforts would be put to market the facility and improve remittances.
“The second half has seen significant growth in excess of 50 percent above the first half and this is probably driven by the facility becoming well known in more units as well as the usual uplift going towards Christmas,” said Ok Zimbabwe chief executive Mr Willard Zireva.
Minister Chinamasa acknowledged Diaspora remittances remained a critical source of liquidity in the market and Government would continue to put in place effective systems to encourage use of formal channels.
According to a 2011 Finscope consumer survey, over 75 percent of people were remitting via informal channels to avoid money transfer costs.
Of all the remittances, 58 percent send money via friends and relatives while 17,5 percent use bus drivers and staff.
It is estimated that those sending money home spend at least a fifth of whatever amount they remit, according to a 2013 FNB South Africa report, which also revealed that two million Zimbabweans in that country send at least US$620 million home each year. A slowdown in South Arfica’s economy and a weaker rand caused a 14,3 percent decline in overall remittances to Zimbabwe last year.
This was the first decline since 2009, when remittances shot 950 percent in just three years from US$200 million.
The United Nations Development Programme said in a 2010 study that of the estimated three million Zimbabweans in the Diaspora, only seven percent did not have dependants at home while 72 percent had three or more dependants.
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