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An estimated $1 billion remitted from the diaspora to Zimbabwe through informal channels

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An estimated $1 billion in diaspora remittances entered Zimbabwe through informal channels in 2015.

This number was shared in the address made by Moris Mpofu, the Divisional Director for Exchange Control at the Reserve Bank of Zimbabwe (RBZ), at the launch of EcoCash’s partnership with Mukuru.

The estimate takes into account diaspora remittances made through informal third party debt settlements made outside the country (instead of being sent home money is deposited in an account held by a friend or relative in the same outside country) as well as person to person carriers.

The person to person channel, which has been a major corridor for cross-border remittances includes the passing money through Malaicha cross-border transporters, long distance bus drivers as well as third party deliverers who just happen to be making a trip back home from the source country.

The RBZ has been closely monitoring remittances particularly because of the huge contribution these inflows have made towards the country’s foreign currency reserves.

It has already acknowledged remittances as the second largest contributor to Foreign Direct Investment.

Unfortunately, there was a 15 % decline in the formal remittances registered in the first half of 2016 with the rise in the use of informal channels cited as one of the contributors to the slump.

With the country experiencing a severe cash shortage the supply of money from formal financial service providers like retail banks has been affected. Any money that makes it “into the system” is hard to cash out.

It’s this situation plus the imminent introduction of bond notes as a foreign currency substitute that has amplified the scarcity of cash as informal channels which ensure that foreign currency is delivered to the recipient as cash become a favourable route.

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