The Sunday Mail
Business Reporter
ZIMBABWE could experience a significant drop in remittances from the Diaspora if the projections by the World Bank are anything to go by.
Diaspora remittances are a lifeline for many families and a key driver of local economic activity.
Central bank figures indicate that Diaspora remittances amounted to US$635 million, or 9,2 percent of total foreign currency receipts, last year.
However, most transactions that use informal channels are largely unaccounted for.
The World Bank actually estimates that remittances to Zimbabwe topped US$1,73 billion last year, which accounts for 13,5 percent of the country’s GDP (Gross Domestic Product).
But the multilateral body sees these numbers declining in 2020 in line with global declines caused by the fallout from the coronavirus.
Overall, global remittances are forecast to drop by an estimated 20 percent this year, according to a statement released by the bank last week.
The projected fall — probably the sharpest in recent history — is attributed to bloodbath on the job market in developed countries and the attendant drop in incomes, particularly for migrant workers.
In Sub-Saharan Africa, remittances are expected to fall by 23,1 percent.
Statistics from the World Bank show that South Africa, the United Kingdom and Botswana, in that order, are the country’s biggest sources of remittances.
However, the UK and South Africa are currently being roiled by the pandemic.
SA projects that its economy might contract by 6,1 percent this year as a result of Covid-19.
Similarly, Gertjan Vlieghe, a member of the Bank of England’s interest-rate setting committee, said the UK was heading for a squeeze on incomes that was unprecedented in its speed and severity.
The value of the two countries’ currencies has slumped since the beginning of the pandemic, which significantly reduces both the value and volume of the remittances. The World Bank opines this drop would increase the vulnerability of many households.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by Covid-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group president David Malpass.
“Remittances help families afford food, healthcare and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”
The global lender advised that effective social protection systems are crucial to safeguarding the poor and vulnerable during this crisis.
“In host countries, social protection interventions should also support migrant populations,” said Michal Rutkowski, global director of the social protection and jobs global practice at the bank.
“Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families.
“These include treating remittance services as essential and making them more accessible to migrants,” said Dilip Ratha, lead author of the Brief and head of the Global Knowledge Partnership on Migration and Development (KNOMAD), which is a WB initiative.
Government has already directed Money Transfer Agencies (MTA) to reopen to address cash challenges as more people now depend on outside remittances after the closure of the informal sector during the 21-day national lockdown.
“The new environment arising from the national lockdown has increased our people’s dependence on remittances, which also have added advantage of reaching directly the most marginalised members of our nation,” President Emmerson Mnangagwa said when he announced the dispensation to allow the MTAs to operate.
