News / National
Zimbabwe to benefit from surge in remittances
30 May 2025 at 09:18hrs | Views
Zimbabwe stands to gain significantly from a projected surge in remittance inflows into Africa, with the African Development Bank (AfDB) forecasting that the continent will receive US$100 billion in remittances this year, a figure expected to nearly triple by 2035 to US$283 billion.
The projections were outlined in the AfDB's 2025 African Economic Outlook (AEO) report, launched this week at the bank's annual meetings in Abidjan, Côte d'Ivoire. The report highlights the growing importance of remittances and the formalisation of business activities as vital tools for fostering inclusive growth and boosting domestic resource mobilisation across Africa.
"Africa is expected to attract about US$100 billion in remittance inflows in 2025, and the formal remittance market could reach a lower bound of US$283 billion by 2035, a threefold increase from 2023," the AfDB stated.
However, the bank cautioned that high remittance transfer costs-ranging between 35 to 75 percent through formal channels-continue to push many transfers into informal routes, limiting the full economic benefits of these funds.
In line with the United Nations Sustainable Development Goals (SDGs), the report stresses the need to reduce transaction costs to encourage the formalisation of remittance flows.
"Reducing the cost of remittances from about 7 percent in 2023 to 3 percent by 2030, a target set by the United Nations Agenda on SDGs, could crowd-in informal transfers to the formal remittance market," the report reads.
Zimbabwe has already made encouraging progress in this area, recording US$2.2 billion in diaspora remittance inflows in 2024-an increase of 22 percent from US$1.8 billion the previous year. These funds have become a critical lifeline, providing much-needed foreign currency and liquidity to the domestic economy.
Economist Mr. Honest Ngwenya emphasized the importance of formalising these flows, citing their potential to stabilise the foreign exchange market and support infrastructure development.
"These funds are not only cushioning families but also helping stabilise the foreign exchange market and bridging gaps in infrastructure financing," Ngwenya said.
He urged Zimbabwe to explore innovative financial instruments such as diaspora bonds to tap into the investment appetite among Zimbabweans living abroad.
"Formal remittance channels create traceability and multiplier effects. Up to 30 percent of these flows can be reinvested in productive sectors such as agriculture, real estate, and small and medium-sized enterprises (SMEs). That's real economic empowerment," he added.
The Reserve Bank of Zimbabwe has pledged to continue incentivising formal remittance inflows, having introduced measures such as zero-rated charges on inbound diaspora remittances. Authorities are also exploring diaspora housing schemes and dedicated investment platforms.
Alongside remittances, the AfDB report highlights the enormous economic potential in formalising Africa's vast informal business sector, which could unlock up to US$125.3 billion in additional annual revenues continent-wide.
"Transitioning from informal to formal activity for Africa's businesses could generate US$125.3 billion annually in additional revenue," the AfDB noted.
This aligns closely with Zimbabwe's ongoing efforts to broaden its tax base and stimulate local investment amid limited external financing and shrinking development aid.
Economist Ms. Alice Chikonzi described the informal sector as both a challenge and an opportunity for Zimbabwe's economy.
"With over 60 percent of our businesses operating informally, formalisation must be incentivised, not punished. Simplifying business registration, offering tax breaks, and linking micro-enterprises to financial services are essential first steps," she said.
Chikonzi stressed the importance of looking inward to the diaspora and informal sector as strategic pillars for economic independence.
"The diaspora and informal sector are not just survival mechanisms-they are key to economic self-determination," she said.
She added that as Zimbabwe consolidates economic stabilisation and implements structural reforms, leveraging remittances and business formalisation could transform temporary recovery into sustained growth.
The AEO report also urges African countries to bolster food sovereignty through investment in sustainable agriculture and agro-processing infrastructure. The AfDB's Special Agro-Industrial Processing Zones (SAPZs) are highlighted as a promising solution to improve food production resilience amid climate change and global supply chain disruptions.
"Improving food sovereignty will empower communities to produce their own food in more sustainable and culturally appropriate ways," the AfDB said.
As Zimbabwe positions itself to harness these financial and structural opportunities, coordinated policy action and stakeholder engagement will be key to turning remittance inflows and business formalisation into foundations for a modern, inclusive economy.
The projections were outlined in the AfDB's 2025 African Economic Outlook (AEO) report, launched this week at the bank's annual meetings in Abidjan, Côte d'Ivoire. The report highlights the growing importance of remittances and the formalisation of business activities as vital tools for fostering inclusive growth and boosting domestic resource mobilisation across Africa.
"Africa is expected to attract about US$100 billion in remittance inflows in 2025, and the formal remittance market could reach a lower bound of US$283 billion by 2035, a threefold increase from 2023," the AfDB stated.
However, the bank cautioned that high remittance transfer costs-ranging between 35 to 75 percent through formal channels-continue to push many transfers into informal routes, limiting the full economic benefits of these funds.
In line with the United Nations Sustainable Development Goals (SDGs), the report stresses the need to reduce transaction costs to encourage the formalisation of remittance flows.
"Reducing the cost of remittances from about 7 percent in 2023 to 3 percent by 2030, a target set by the United Nations Agenda on SDGs, could crowd-in informal transfers to the formal remittance market," the report reads.
Zimbabwe has already made encouraging progress in this area, recording US$2.2 billion in diaspora remittance inflows in 2024-an increase of 22 percent from US$1.8 billion the previous year. These funds have become a critical lifeline, providing much-needed foreign currency and liquidity to the domestic economy.
Economist Mr. Honest Ngwenya emphasized the importance of formalising these flows, citing their potential to stabilise the foreign exchange market and support infrastructure development.
"These funds are not only cushioning families but also helping stabilise the foreign exchange market and bridging gaps in infrastructure financing," Ngwenya said.
He urged Zimbabwe to explore innovative financial instruments such as diaspora bonds to tap into the investment appetite among Zimbabweans living abroad.
"Formal remittance channels create traceability and multiplier effects. Up to 30 percent of these flows can be reinvested in productive sectors such as agriculture, real estate, and small and medium-sized enterprises (SMEs). That's real economic empowerment," he added.
The Reserve Bank of Zimbabwe has pledged to continue incentivising formal remittance inflows, having introduced measures such as zero-rated charges on inbound diaspora remittances. Authorities are also exploring diaspora housing schemes and dedicated investment platforms.
Alongside remittances, the AfDB report highlights the enormous economic potential in formalising Africa's vast informal business sector, which could unlock up to US$125.3 billion in additional annual revenues continent-wide.
"Transitioning from informal to formal activity for Africa's businesses could generate US$125.3 billion annually in additional revenue," the AfDB noted.
This aligns closely with Zimbabwe's ongoing efforts to broaden its tax base and stimulate local investment amid limited external financing and shrinking development aid.
Economist Ms. Alice Chikonzi described the informal sector as both a challenge and an opportunity for Zimbabwe's economy.
"With over 60 percent of our businesses operating informally, formalisation must be incentivised, not punished. Simplifying business registration, offering tax breaks, and linking micro-enterprises to financial services are essential first steps," she said.
Chikonzi stressed the importance of looking inward to the diaspora and informal sector as strategic pillars for economic independence.
"The diaspora and informal sector are not just survival mechanisms-they are key to economic self-determination," she said.
She added that as Zimbabwe consolidates economic stabilisation and implements structural reforms, leveraging remittances and business formalisation could transform temporary recovery into sustained growth.
The AEO report also urges African countries to bolster food sovereignty through investment in sustainable agriculture and agro-processing infrastructure. The AfDB's Special Agro-Industrial Processing Zones (SAPZs) are highlighted as a promising solution to improve food production resilience amid climate change and global supply chain disruptions.
"Improving food sovereignty will empower communities to produce their own food in more sustainable and culturally appropriate ways," the AfDB said.
As Zimbabwe positions itself to harness these financial and structural opportunities, coordinated policy action and stakeholder engagement will be key to turning remittance inflows and business formalisation into foundations for a modern, inclusive economy.
Source - The Chronicle
