Diaspora remittances: help or hindrance?

It made me wonder if it was better to buy a family member 10 goats for $350, as opposed to sending seven lots of $50 every time a goat has to be bought for whatever purpose.

As part of Minister Chinamasa’s mid-term policy review, it was announced that Diasporans sent home a staggering $400m in the first half of this year alone. Collectively, we Diasporans are on course to send home the equivalent of nearly a quarter of the government’s total annual budget. Or put another way; it’s enough to pay the wages of over 125,000 of the (reported) 500,000 civil servants. That’s pretty serious money!
Through these remittances, whole families have averted hunger, children have completed their studies and the general economy has benefitted indirectly as a result. As Diasporans, we are therefore playing a crucial role in the economy.
But have we ever asked ourselves if we are supplying this scarce resource in the most efficient way? Is it actually helping or hindering our families and friends back home?

Potential to hinder
Some may disagree, but I think most of us send money back home to meet an urgent or a recurring need. The wide spectrum of needs ranges from funerals to rent to school fees. Most is probably consumed as soon as it lands in the EcoCash wallet, or at a MoneyGram agent. This has the potential of creating a few problems, namely:
a) The person in the diaspora will need to keep sending money home, since there’s no other source of income. This in turn limits their own day-to-day quality of life in their adopted nation.
b) The recipients of remittances will (either willingly or sub-consciously) develop a dependency syndrome, in the knowledge that a safety net exists abroad.
c) Related to the above, it might mean that some recipients end up living beyond their means, due to the indirect subsidies they receive from abroad.
d) At a national level, it means the diasporan might indirectly contribute to a national epidemic of a population not living within its means. As we have seen, this has negative implications for the economy (leading to more diaspora money being needed!)
It doesn’t look like an efficient or sustainable way of going about things. Is there no way to attend to these needs without creating knock-on problems?

Potential solutions
As Diasporans, I think this is a debate we should be having. There must be plenty of solutions that minimise the above problems. A couple I can think of are below:
Send ‘project’ money – Instead of being the source of income, help your family and friends generate their own income. You can then – in time – wean them off. It actually doesn’t take a lot to get someone started. As an example; I was in Masvingo last December to celebrate Christmas with the in-laws. As a Mukwasha/Umkhwenyana, I bought a goat to add to the family feast. That goat cost me $35 (and I suspect that included a Christmas mark-up).
It made me wonder if it was better to buy a family member 10 goats for $350, as opposed to sending seven lots of $50 for whatever purpose. The goats will reproduce, and thus lessen the burden on me in future. It would also mean I’m making the family member self-reliant over time, by selling a goat whenever they need the cash. Those with deeper pockets or greater commitments could buy their family something like a two-wheel tractor (it was priced at around $1,000 the last time I checked). Your family member could use this to plough other people’s land (even in urban areas) for a fee, which would then meet any recurring expenditure. The list of potential projects is endless.

Buy life insurance
I recently read an academic research paper done by a fellow diasporan that found that (unsurprisingly) very few people have non-compulsory insurance cover in Zimbabwe. What was interesting was the key reason behind this. It wasn’t because people didn’t think they needed insurance, or because they couldn’t afford it. It was because they saw the wider family as offering that insurance cover! People are therefore enjoying the benefits of insurance, without appreciating the related costs.
Where they are able, we could encourage family members to get at least funeral cover through a registered insurance company in Zimbabwe. If they can’t afford it, we could still encourage them to get it, with us paying the premiums. Premium rates for funeral cover start from as little as $1 a month for a $500  lump sum pay out. As well as the financial benefits on both sides, it might have the added benefit of helping some family members become more financially literate. This would have wider benefits beyond the intended objective.
I could go on, but hope I’ve done enough to stir up a debate. By the government’s own admission, the Diaspora constituency is now a key stakeholder in Zimbabwe’s economy. Let’s contribute in a way that empowers our families and friends (and thus indirectly helps to strengthen the economy). This will in time reduce the financial burden on us. – Masimba Zata is a financial analyst who currently lives and works in the UK. He can be contacted on masimbazata@yahoo.co.uk