Zim diaspora remittances bolster forex inflows

Enacy Mapakame

Although Zimbabwe continues to lose skilled personnel to the diaspora, the increase in remittances is helping the country to significantly grow its foreign currency inflows.

This is also driving consumer demand as a significant number of households are getting economically empowered through remittances from the diaspora, experts have said.

Remittances accounted for 14 percent of total foreign currency receipts last year. According to the International Monetary Fund (IMF), remittance inflow as the process, “where migrants send home part of their earnings in the form of either cash or goods to support their families, these transfers are known as workers’ or migrant remittances.”

In 2022, total international remittances including from non-governmental organisations (NGOs) amounted to US$2,8 billion, which was an increase of 16 percent from the US$2,4 billion recorded in 2021.

Of the total amount, diaspora remittances amounted to US$1,66 billion, a 16 percent increase from US$1,43 billion in 2021.

This comes as Zimbabwe continues to lose skilled professionals such as lecturers, engineers, medical practitioners and accountants to the USA, UK, Australia, and South Africa amongst many other countries.

Mark and Associates Consulting Group, which provides consultancy on the economy, business, politics and society, says while the country cannot do much to bring back these professionals, the benefit of having a large diaspora community has become evident.

“Most of these professionals living in more developed nations are being paid sufficiently well to make family remittances.

“Diaspora remittances now represent a significant number and have a direct impact on household incomes hence consumer demand,” said the consulting firm.

Of the total remittances, South Africa is the largest contributor and accounts for 40 percent, followed by the United Kingdom at 25 percent. Other major sources are the USA, which contributes 11 percent and Australia at 6 percent.

Remittances have been growing rapidly in the past years, and now represent the largest source of foreign direct investment for many developing economies.

For Zimbabwe, the major reason for migration is due to lack of work opportunities. According to the International Organisation for Migration (IOM), Migration has essentially been a household strategy to address current and future risk.

“Dwindling opportunities for productive employment and career advancement as well as unequal employer–employee relations in the local labour market tend to influence decisions to emigrate,” said Mark and Associates.

The net migration rate for Zimbabwe in 2022 was -4,797 per 1 000 population. The net migration rate is the difference between the number of persons entering and leaving a country during the year per 1 000 persons. A negative rate indicates an excess of persons leaving the country.

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