Diaspora remittances continue to play an important role in Zimbabwe’s economy, posting a 33 percent increase to 466.2 million U.S. dollars as of July 31, compared to 349.7 million dollars during the same period in 2019, latest central bank figures show.
The surge could be a result of many Zimbabweans in nearby countries such as South Africa and Botswana opting to use formal money transfer channels because of complications posed by COVID-19.
With travel across borders curtailed, people in the diaspora can no longer use informal couriers such as cross-border bus and truck drivers and passengers to send funds.
Reserve Bank of Zimbabwe governor John Mangudya said the diaspora community has greatly assisted the economy by injecting more foreign exchange in the first seven months of the year, The Herald newspaper reported on Friday.
“Over the past months, despite COVID-19, the amount of money that is coming from the Diaspora to Zimbabwe has never gone down,” he was quoted as saying.
Mangudya said monetary authorities would not stop recipients from using the foreign currency in its form.
“We can’t say ‘don’t use that money’. So, when we put Statutory Instrument 185 of 2020 (use of free funds and forex trading) we were recognizing that our people are bringing in money and we call it ‘free funds’, and we are saying businesses should pay tax using the same currency when trading,” he said.
He reiterated that the green-light to use foreign exchange when trading locally doe not mean the country is returning to dollarization.
Instead, he said, Zimbabwe is in the medium term dollarized category of economies like the Democratic Republic of Congo (DRC) and Zambia, which use both local currency and foreign exchange in domestic trading.
Zimbabwe is among the leading recipients of remittances in the Common Market for Eastern and Southern Africa (COMESA) region alongside Egypt, Kenya, Tunisia and the DRC.
The country also leads in terms of contribution of remittances to gross domestic product, at 13.5 percent, according to the COMESA secretariat.