Zimbabwe’s formal remittances for 2016 decline by 17% to US$780 million – Blame a weak Rand & informal routes

In the 2017 national budget statement for Zimbabwe which was shared recently by the Minister of Finance Patrick Chinamasa, it was announced that formal remittances for 2016 are projected to amount to US$780 million which is a 17% decline from the US$935 million recorded in 2015.

This is the first decline in remittances growth recorded since “dollarisation” or the adoption of a multi-currency regime.

According to Chinamasa, this is a reflection of the strengthening of the United States dollar against currencies in other markets where Zimbabwe records remittances inflows from.

The larger part of the country’s formal remittances are registered from the South Africa corridor, a situation which is a result of the huge diaspora population that is based in the neighbouring country.

South Africa’s currency, the Rand, weakened significantly against other global currencies due to factors like falling commodity prices.

However, another factor in falling remittances which Chinamasa alluded to earlier this year, has been the rise in the use of alternative informal remittance channels.

The cash shortage in Zimbabwe has created challenges for recipients who aren’t always able to access the actual cash that is sent from across the border. Options like informal remittances through people entering the country counter this but also mean lower figures for remittances are recorded.

The Reserve Bank of Zimbabwe has been trying to encourage formal remittances through strategies like the 3% incentive extended to recipients (you are paid an extra 3% for all money received formally) plus greenlighting straight to wallet remittances integrations launched by mobile money services like Econet’s EcoCash and Telecel’s Telecash.