Monetary Statement Review – Commentary – Part 2

Millions of migrant workers send remittances to
their families and communities of origin. Worldwide, annual remittances may
amount to more than one hundred billion dollars, primarily sent from the
industrial to the developing world. The mid-term policy statement was
disappointing in that it lacked any clear plan on how to enhance
contribution from NRC given that GMRI Capital estimates indicate that every
extended family in Zimbabwe has at least 3 NRC who regularly remit foreign
currency to support families in Zimbabwe. The Zimbabwean Diaspora community
now plays such a critical role in the nation’s financial well-being such
that any meaningful policy review should acknowledge this and seek ways to
enhance this contribution.

Remittances are a good buffer against macro-economic volatility.  
Remittances by NRC help improve balance of payment, balance of trade, and
foreign exchange shortfalls. Remittances are generally less affected by
political crisis or conflicts or even corruption. Transfer costs are lowest
when remittances are sent through Regulated financial institutions, such as
banks and money transfer agencies such as Crown Exchange, Western Union and
World Link.  
Significantly, when financial institutions offer these services to
immigrants, they also sell other products.
This makes it a reliable and stable source to support local currency.

In slightly better off communities, improved consumption as well as
investment and employment created through remittance-led activities promote
significant economic growth. In Mexico, for example, it is estimated that
each $1 received in remittances increases GDP by $3.  
Whilst this is on the higher side there is nothing that can stop Zimbabwe
from matching such a multiplier effect.

During the Asian economic crisis in 1997-99, when foreign direct investment
(FDI) tumbled down, remittances actually increased and helped cushion the
impact of the crisis. Because people in the Diaspora feel special empathy
towards their relatives and friends in times of crisis in the home country,
they tend to be even more generous and forthcoming with remittances than in
normal times. During the various state sponsored operations ( dzikisa
mutengo, murambatsvina etc) a study by GMRI Capital revealed that many money
transfer agencies sending money to Zimbabwe experienced significantly higher
volumes during such man made crisis.

Conservative estimates indicate that around 200 million people migrate
annually. In many countries, the demand for foreign labor has increased.
Moreover, migration flows are not unidirectional, from the South to the
North. For example, Greeks migrate to Germany and the United States, while
Albanians migrate to Greece. South Africans move to Australia and England,
while Malawians, Mozambiqueans, and Zimbabweans work in South African mines
and the service industry. This trend is not temporary and as such there is
need for clear policy to ensure mutual benefits for the NRC and the home
country.

  Ireland stands out as a clear shining example of economic success backed
by effective mobilization of non-resident remittances and investments. Until
just over a decade ago, Ireland used to be one of the poorest countries in
Western Europe. To avoid poverty and to improve their lot, a large number of
Irish migrated to the United States and other countries. This pattern is
very similar to what Zimbabwe has been experiencing over the last few years
as the economic and political environment became hostile.

As they became more prosperous, the Irish Diaspora started investing in
their home country. With the correct sets of consistent and progressive
policies and incentives, Ireland started prospering.  
Currently Ireland has a booming economy and has joined the league of the
richest countries in the world.

In addition there have been positive impacts of remittances in national
development in countries ranging from Israel to Jordan, Lebanon, Turkey,
Mexico, the Philippines, India, Pakistan, Bangladesh and Sri Lanka.

In terms of servicing the large and growing number of NRC, it is highly
desirable that Zimbabwe’s diplomatic and consular services be restructured
and strengthened in countries and regions where there is a large
concentration of NRC with a clear aim to encourage their participation in
the national economy beyond just sending money. This has to be done in a
sustained manner and not as an election gimmick or quick fix solution to
current crisis.

As a supporting measure there is an urgent need to review and amend
Zimbabwe’s immigration regulations especially with regards to dual
citizenship .A significant number of Zimbabwean NRCs are now settled in
foreign lands and are unlikely to be interested in giving up their new
immigration status just for the sake of going back to Zimbabwe.  
The Indian government recently introduced the “Overseas Citizenship of India
(OCI)” scheme in order to allow a limited form of dual citizenship to
Indians. This is a model that Zimbabwe could adopt with the necessary
adjustments. This can open channels to allow NRC to vote and possibly have
exclusive members of parliament reprehensive non-resident Zimbabweans who
are in the Diaspora. This measure will go a long way in showing commitment
on the part of the authorities to incorporate policies which serve all
Zimbabweans, not just those in Zimbabwe

It is clear that a quick make-over of the monetary policy will not deliver
the Economic prosperity that Zimbabweans seek .There is need for more
comprehensive policy changes to usher a modern, progressive, more tolerant
democracy to build a just, prosperous, peaceful society where people’s human
and property rights respected. This is critical to build confidence among
the NRC and encourage investments by the NRCs.

By Gilbert Muponda

Gilbert Muponda is a Zimbabwe-born entrepreneur. He can be contacted at
gilbert@gmricapital.com .