Oliver Kazunga, Senior Business Reporter
DIASPORA remittances into Zimbabwe dropped by 17,9 percent to $1,574 million in 2016 largely due to weakening of regional currencies and the general poor performance of the global economy.
In 2015 remittances from the Diaspora community closed the year at $1,917,7 million.
In his 2017 Monetary Policy Statement released Wednesday, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya, said Diaspora remittances were a major source of import financing in the economy hence Government has put in place incentive mechanisms to enhance the inflows.
“Remittances, which are also a major source of import financing declined by 17.9 percent in 2016, from $1,917,7 million received in 2015 to $1,574 million in 2016.
“Of the total amount received in 2016, $779 million reflects remittances from the Diaspora while remittances from international organisations (non-governmental organisations) amounted to $795 million,” he said.
Dr Mangudya said the decline in Diaspora remittances was attributed to the poor performance of the global economy, the depreciation of the South African Rand (South Africa contributes about 34 percent of the total Diaspora remittances) and the increasing preference of the Diaspora to send remittances in kind and through informal channels.
“The introduction of Diaspora Remittance Incentive Scheme (DRIS) is expected to increase the remittances sent through formal channels,” he said.
Remittances remain one of the main sources of net financial flows not only in Zimbabwe but in most developing countries as they overshadow official development assistance, private debt and portfolio equity.
Israel, Ethiopia and India have taken advantage of large inflows of remittance to issue diaspora bonds to raise project finance for public sector investment programmes.
It is estimated that about three million Zimbabweans are residing in the Diaspora and there has been growing recognition that migration, if managed properly, can meaningfully contribute to national development.