Diaspora remittances into the country dropped nearly seven percent in the first quarter of 2017, despite a three percent central bank incentive, official figures show.
The incentive, introduced in October 2016 under the government’s scheme to boost foreign currency flows into the country, appeared to have triggered an 11 percent monthly increase in remittances, which reached $50 million last December.
But the Treasury bulletin for the first three months of 2017 shows Diaspora remittances dropped 6,7 percent, to $180 million,compared to $193 million in the corresponding period last year.
Equivalent to at least 30 percent of the country’s $4 billion National Budget, Diaspora remittances are a major source of liquidity in a country battling a wide trade gap and low levels of foreign direct investment.
Treasury attributed the drop in remittances to a sluggish global economy.
“The decline in Diaspora remittances is partly attributed to the sluggish performance of the global economy as well as errors and omission arising from conduct of remittances through informal channels,” reads the bulletin.
Zimbabwe has seen a 17 percent decline in official remittances, from $935 million recorded in 2015 to $780 million last year.
Despite the decline, Zimbabwe hopes to receive at least $1,2 billion from its estimated three million non-resident citizens this year.
According to the World Bank (WB), remittances to developing countries fell for a second consecutive year in 2016, contributing US$429 billion that year, a decline of 2,4 percent over US$440 billion in 2015.
“Low oil prices and weak economic growth in the Gulf Cooperation Council countries and the Russian Federation are taking a toll on remittance flows to South Asia and Central Asia, while weak growth in Europe has reduced flows to North Africa and sub-Saharan Africa,” says the World Bank, which estimates that there were more than 247 million people living outside their countries of birth in 2013.
“The decline in remittances, when valued in United States dollars, was made worse by a weaker euro, British pound and Russian rouble against the US dollar.” Financial Gazette