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'More Zimbabwean families survive on diaspora remittances'

by Staff reporter
22 Aug 2019 at 07:47hrs | Views
THE majority of poverty-stricken Zimbabwean families are now heavily dependent on diaspora remittances for their upkeep as the economy continues on a nosedive, with the value of the local currency failing to keep pace with the greenback, a survey by a global financial services firm, Fitch Solutuions, has revealed.

With citizens facing a plethora of challenges, including runaway inflation, rising prices of basic commodities and services, power cuts, fuel and cash shortages, hunger and low disposable income, many have turned to the diaspora to supplement incomes.

This comes as the average monthly salary is $500 against a cost of living of nearly $1 700 as at end of last month, according to the Poverty Reduction Forum Trust.

"Zimbabwean consumers have become reliant on remittances as a source of income. Amid economic and political turmoil domestically, millions of Zimbabweans have emigrated, with an estimated one to five million Zimbabweans living in neighbouring South Africa alone. Subsequently, many households in Zimbabwe rely on remittances from friends and family members living abroad to fund their spending," said Fitch Solutions in its newly released Africa Monitor- Southern Africa Edition for July 2019.

"The Federal Reserve Bank of St Louis estimates that remittances are as high as 14% of GDP (gross domestic product) for Zimbabwe. As a result of this large inflow of money, cross-border payments and the electronic transactions industry have been developing at a rapid rate."

The Federal Reserve Bank of St Louis, one of 12 regional central banks that, along with the Board of Governors in Washington DC, make up the United States central bank, based its data from the World Bank statistics.

According to their website, the Federal Reserve Bank of St Louis based its remittance inflows to the GDP for Zimbabwe on "workers' remittances, and compensation of employees comprise current transfers by migrant workers and wages and salaries earned by non-resident workers. Data are the sum of three items defined in the fifth edition of the IMF's Balance of Payments Manual, that is, workers' remittances, compensation of employees, and migrants' transfers."

"Remittances are classified as current private transfers from migrant workers resident in the host country for more than a year, irrespective of their immigration status, to recipients in their country of origin," reads the report on the Federal Reserve Bank of St. Louis website.

"Migrants' transfers are defined as the net worth of migrants who are expected to remain in the host country for more than one year, that is, transferred from one country to another at the time of migration. Compensation of employees is the income of migrants who have lived in the host country for less than a year."

According to its Inter-Censal Demographic Survey of 2017, ZimStat said data indicated that the majority of emigrants from Zimbabwe are based in the southern African region, in particular, South Africa with 87% and Botswana (4%).

For overseas countries, the United Kingdom contributed close to 3% of the emigrants, while other countries in Europe, South America, Australia, the United States, New Zealand, Canada, Asia and other countries combined contributed close to 4% of all emigrants.

ZimStat found that "21% of emigrants sent remittances ranging in amounts from US$101 to US$500, while 17% of the emigrants had remitted amounts ranging from US$1 to US$100 and 9% had remitted between US$501 to US$1 000, and only 4% sent home between US$1 001 to US$5 000".

Remittances are the country's second source of forex after exports. In 2018, diaspora remittances declined by 14% to US$597,4 million from US$695,3 million in the previous year.

Source - newsday