The Sunday Mail
Enacy Mapakame
REMITTANCES from Zimbabweans working abroad are forecasted to increase by 11,1 percent this year to US$2 billion, economists believe.
The economists attribute the surge to a recovery of the South African economy. The remittances, representing 20 percent of the country’s gross domestic product, are mainly for transactions made through formal banking channels and via registered Money Transfer Agencies.
Brokerage IH Group estimates that inclusive of informal transfers, diaspora remittances will top US$3,5 billion.
It is believed that nearly 70 percent of the remittances will come from South Africa, which is speculated to hold the huge chunk of Zimbabwe’s Diaspora.
The remainder will come from Zimbabweans living in the United Kingdom, Botswana, Australia, US, Canada, New Zealand and other regional and international countries.
South Africa’s GDP is expected to grow 2,5 percent and 3,5 percent in 2014 and 2015 respectively.
Last year, a slowdown in SA’s economy and a weaker Rand caused a 14,3 percent slide in overall remittances to Zimbabwe which were US$1,8 billion, the first decline since 2009.
Higher transfer costs and the shift towards informal platforms were blamed for the drop.
“It is unlikely that the decrease in remittances in 2013 can be fully attributed to greater use of informal transfer mechanisms. A more plausible explanation is that a weakening Rand and slower economic growth in South Africa, has eroded the value of remittances, as the disposable income of Zimbabweans living in South Africa is reduced, and the value in US dollar terms eroded by a weak exchange rate,” said IH Group in a recent consumer report.
First National Bank of South Africa last year claimed that research had indicated that Zimbabweans in SA remit about R6,7 billion or US$620 million a year, with a fifth of the amount spent on transfer costs.
However, IH Group observed that the cost of sending money subsequently declined between 2012 and 2013.
For instance, while the cost of transferring US$200 from South Africa to Zimbabwe cost R261 in the third quarter of 2012 , it fell 13 percent to R228 in 2013.
“The significance of remittances both to Zimbabwean consumers and to the economy as a whole is evident. Since remittances from the diaspora are such important supplements to Zimbabweans’ incomes, we can also assume that this will result in greater spending power and therefore consumption expenditure within the Zimbabwean market,” explained the report.
In a 2010 study, the United Nations Development Programme said that only seven percent of Zimbabweans in the Diaspora did not have dependents at home, while 72 percent had three or more dependents in Zimbabwe.
According to a Finscope Consumer survey in 2011, remittances made via family and friends account for 58 percent of all transfers, while 17,5 percent use other informal channels.
Presenting the 2014 National Budget, Finance Minister Patrick Chinamasa acknowledged the Diaspora’s key contribution to the country’s economic growth and noted that many Zimbabweans survived on remittances between 2002 and 2009.
“Many Zimbabwean professionals, artisans and other skilled persons who left the country and may not return soon, still want to invest and contribute to the country’s development process. Accordingly, treasury shall develop and implement a framework for further facilitation tapping into this resource,” he said.
