Victoria Ruzvidzo : Business Focus
The Diaspora factor has potential to play a critical role in our economy if given due attention. Zimbabwe has over the years benefited from remittances by non-resident Zimbabweans spread across the globe but there is immense potential to achieve from the resources in terms of funds, skills and the expertise amassed out there that can help transform this economy.Government and the central bank have come up with a few facilities and tools to harness the diaspora but it appears these have not been carried to fruition hence the country is still to benefit significantly from its people in the UK, US, SA, Australia, New Zealand, Germany and many other countries.
Just yesterday I had a briefing from our Lifestyle and Entertainment Senior Reporter Tafadzwa Zimoyo who had an opportunity to meet a few Zimbabwean millionaires, in pound terms, based in the UK who are running banks, municipalities, telecommunication, media and property development businesses. They expressed their willingness and desire to plough back home.
Studies have shown that international remittances have become a major source of external development finance, and have been found to be relatively more stable and more dependable than other forms of foreign-exchange inflows such as Portfolio Equity (PE), Foreign Direct Investment (FDI) and Overseas Development Assistance (ODA), and may even be counter-cyclical in times of economic hardship.
Tafadzwa spent a week in London and within that short space of time him and a team of journalists from other countries who were attending a training seminar, met some of the who’s who of London, the bulk of whom were Zimbabweans holding key positions in that city and beyond. Some of them with personal relationships with the prime minister, the queen and other presidents across the globe.
His story illustrates an already established fact that Zimbabweans occupy strategic positions in many of these economies but this information has not been used effectively to develop this Southern African country. Indeed Zimbabwe could benefit from their networks and expertise if much thought and energy is applied into harnessing such reservoirs of expertise and resources.
The diasporans have exposure to new technology and better ways of doing things hence the need for Zimbabwe to take advantage of its nationals plying their trade out there.
We have said that sustainable strategies to fend off challenges confronting the economy today lie in home-grown solutions, a fact that holds true, but these solutions should include and involve the Diaspora factor.
Interactions with non-resident Zimbabweans at such forums as the World Economic Forum always leave me with a feeling that Zimbabwe has all it takes to transform this economy into a regional powerhouse with enough stamina to compete effectively on the global space. This may sound like a fallacy today or mere wishful thinking but every sane Zimbabwean will agree with me that we have the natural resources and the educated and skilled manpower base to achieve even beyond our expectations.
What is required is to get the equation right by summoning all the factors and facets that will turn the economic wills of this country.
If we have Zimbabwean millionaires or even billionaires in British pounds, US dollars, Euros, Swiss Francs, shillings, Indian rupees, Japanese yen, yuan or whatever trade-able currency, why cant we get these to invest back home, not just in small personal projects but also in big ones that will contribute significantly to the country’s Gross Domestic Product.
The diasporans have the wherewithal to help resuscitate some of the dying companies in the manufacturing and other sectors of the economy. What is required is a serious drive to engage this constituency and to tailor-make facilities into which they can invest. Obviously with a good Return On Investment (ROI) diasporans are a critical component in a country’s development process. While some development practitioners and theorists may argue that more effective development support largely comes through transnational firms, non-governmental organisations and donor assistance, diasporans also have the capacity to influence the process, ensuring successful outcomes.
Already these make a huge impact through remittances to their families back home but a more formalised approach could immensely benefit the economy. In his monetary policy statement in January last year, Reserve Bank of Zimbabwe Governor Dr John Mangudya highlighted the importance of non-resident Zimbabweans in the economy. Describing them as a sector “too important to ignore”.
“To this end, Government and the Reserve Bank are putting in place measures to promote investment from the diasporans, over and above remittances. Through Homelink’s newly set up business unit, Investlink, the Reserve Bank I spearheading investment needs of the dasporans through integration with economic activities in the country,” said Dr Mangudya.
The diasporans were expected to syndicate, form consortiums and pull resources for investments in tourism, through the development of theme parks, in agriculture, particularly irrigation and horticulture for export markets, in manufacturing sub-sectors, in industry in general through the Zimbabwe Investment Authority and on the Zimbabwe Stock Exchange, among other platforms.
We have not heard much on these and we hope the responsible authorities are running with it.
Presently remittances stand at about $1,8 billion annually and as of last year, the central bank said the figure would soon gravitate towards the $2 billion market, equivalent to more than 50 percent of this country’s export earnings.
Diaspora remittances are now the second largest source of liquidity in Zimbabwe after exports, reaching $830 million in the first half of 2016.
In June, diaspora remittances were pegged at $157 million and there are estimates that they will reach $1,5 billion by the end of 2016.
The Government is exploring issuing diaspora bonds to entice the diaspora community to inject more money into the economy.
“From January to June we have received $830 million diaspora remittances and this includes those coming through non-governmental organisations, which have contributed about $440 million,” said Kupukile Mlambo, deputy governor of the Reserve Bank of Zimbabwe, in a Zimbabwe Independent interview.
Official diaspora remittances grew from $300 million in 2009 to more than $800 million in 2014. In 2015, remittances from the diaspora were $935 million — more than Zimbabwe gets through foreign direct investment (FDI).
FDI inflows tumbled from $545 million in 2014 to $421 million in 2015 — a 23 percent drop. The country struggles to attract meaningful investment due to policy inconsistency surrounding indigenisation and high levels of corruption.
An estimated 2 million Zimbabweans are living abroad, with the majority in South Africa and the UK.
Countries such as Rwanda, Nigeria, Kenya, Ethiopia, India, Bangladesh, Israel and China benefit immensely from their Diaspora in terms of economic development.
The flow of remittances to developing countries attracts increasing attention because of the volume and impact on receiving countries. Between 2000 and 2010, individuals living outside their countries grew from 175 to 215 million people, representing 3,2 percent of the world’s population.
1. Most often, the remittances transfer are backed by altruistic or self-interest motives.
2. “In 2010, official recorded remittances received amounted to $293 billion, exceeding total official development aid ($90 billion), and amounted to roughly sixty-three per cent of foreign direct investment inflows ($463 billion) received by developing countries in that year.
3&4. Countries face a lot of unprecedented economic shocks as a result of fall in commodity prices (such as oil and other petroleum products, coffee, steel, gold and wheat), civil conflict and wars, crop and livestock loss as natural disasters.
5. These countries must cope with such shocks as they affect the national wealth, the government’s future financial plans and the growth of the economy. They do this by relying on external financial flows in times when they experience these transitory income shocks,” says the report.
More and more developing countries now realise the importance of these “scattered seeds” as agents of development.
Countries such as China, with at least 30 million diasporans, have established specific institutions to facilitate engagements with the Diaspora. The Zimbabwean equivalent is the Homelink.
This country has an estimated 3,4 million people in the Diaspora. The figure is believed to have increased in recent times as more people emigrated in search of greener pastures.
The Zimbabwean economy, that may have suffered from brain drain a few years ago, can now gain from the resources, skills and expertise that has been amassed by these very people. This could easily reverse the effects of the loss experienced when they left the country in their numbers.
“Highly unnoticed is the impact of remittances transferred by African Diaspora to their continent of origin. These financial remittances contribute tangibly towards poverty alleviation, economic development, savings mobilisation, productive investments and emergency aid. During natural disasters or economic recessions, for example, contributions from African Diaspora effectively provide a form of insurance to millions across Africa, which serves to shore up economic stability in many poor African countries in the long run,” read part of an article in the Economist Magazine.
Below is a contribution from George Nduma Sithole based in the UK. He is a member of the Institute of Physics (MInstP) and that of the Institution of Engineering and Technology(MIET), in that country.
I read your article of August 4 2016. It had great ideas which prompted me to send this email to you.
You see, sub-Saharan Africa is still grappling with a capitalist system which is not an integral part of this region’s culture. Yes, cultures continue to evolve, so that after a reasonable space of time, they tend to assume different forms, dimensions, structures, etc. Our region has a unique opportunity to develop a new economic system, which would liberate us from this capitalist system, which has enslaved us for the last five hundred years (slavery).
In it, we will never win as it is designed for its proponents to remain supreme, for ever. China has modified it by introducing state capitalism and is currently causing ructions in the so called western democracies.
In Zimbabwe, we need to embark on a programme to change the mindset of the leaders as well as that of the rank and file. A propaganda project must be undertaken, to educate the populace that we are our own economic liberators, as we were our own political liberators. We cannot compete with technologically advanced countries, but can easily create an environment which will enable us to produce all the basic needs of our country, with little recourse to foreign aid. The country has the basic expertise in diverse sectors, to put it on a sound economic footing. We can do it. The masses must be told that our country is currently poor materialistically, while we sit on an unprecedented natural wealth. We must kill off the country’s money obsession, which is one of capitalist vices. We have to tell the population to rise to this mammoth challenge. We are looking for an economic revolution in Sub-Saharan Africa. To me, it seems Zimbabwe has the best educated elites to set this region ablaze.
Remember, we black people are the cradle of civilisation and are the origin of humanity (Homosapiens-Natural History).
We gave the world science, the arts, astronomy, religion, mathematics, social organisation, calendar, architecture (the Great Pyramid of Giza), etc. I am now pleased that the world now acknowledges our great achievements and contribution, since time immemorial. It is my prediction that we will be back to dominate the world again, by the turn of the 22nd century. We will be back. I won’t be there,though. Zimbabwe is poised to become one of the richest countries on our planet. We must not shout at foreigners, but get on with our duties.
I visit Zimbabwe once every year to keep abreast of current socio-economic developments in the country. I think that we are a great and resilient nation. You can imagine how we led our lives during the colonial era. I am now an elderly man but mentally very active. I think I can confidently say, I do understand how a capitalist system works now. I have even worked in their factories as a labourer. When I returned to work in Zimbabwe, I used to write some articles in The Herald. I am pleased to see that we have credible writers in this great paper. I am ready to make my contribution on how we can enhance industrialisation in our country. I wrote quite extensively in my book, about the importance of science, technology, engineering and mathematics (STEM).
Thank you very much” — George Nduma Sithole, Bedford UK
In God I Trust!!!
Email: Victoria. [email protected] WhatsApp: 0772 129 972