The weakening of the rand against the dollar earlier this year has hurt neighbouring countries, with Zimbabwe saying it has contributed to the decline of remittance inflows into that country.
Experts have, however, argued that the rand, which was at its lowest in January when it traded at R16.52 against the greenback following Nenegate in December last year, should not be a scapegoat for the country’s woes.
Martyn Davies, the managing director of emerging markets and Africa at Deloitte & Touche, said Zimbabwe should focus on building the country instead of looking for excuses.
“Zimbabwe is the Venezuela of Africa without the oil. To say that the depreciation of the rand contributed to lower remittance is finding a scapegoat for its problems,” Davies said.
Zimbabwe has been battling an economic crisis that has seen businesses shed jobs and Âcompanies close down, prompting a spike in the country’s import bill.
Banks ran out of cash and the central bank said it would start printing “bond notes” in denominations of $2 (R29), $5, $10 and $20. The country already has “bond” coins that can be used at par with the US dollar.
The Minister of Finance and Economic Development, Patrick Chinamasa, flagged last week that the government anticipated a continued drop in remittances beyond this year when he delivered his mid-year fiscal policy review.
Chinamasa said this would impact on the country’s balance of payments, since remittances had been a leading contributor of foreign direct investment.
During the first six months of this year, Zimbabwe recorded $387.9 million in diaspora inflows - a 15 percent decline from the $457.8m in the first half of last year.
The country attributed the decline to the currency depreciation in source markets such as South Africa, the major source of remittances for Harare.
A 2012 report by the Finmark Trust said that it was difficult to quantify remittances to Zimbabwe from South Africa as the majority of migrants were undocumented and had no access to the formal banking sector.
The report said Zimbabweans comprised 59 percent of the 3.3 million migrants in the Southern African Development Community, most of whom were not documented, with only 35 percent having formal legal migration status.
According to the report, Zimbabwe migrants preferred informal channels of sending and receiving money, including sending money via taxis, buses, trucks, friends and family, as the sector was more reliable and less intimidating.
However, some now sent and received money through mobile money remittance services, including EcoCash, Mukuru and Hello Paisa.
Efficient Group chief economist Dawie Roodt said in addition to the weakening of the rand, plans by the country’s central bank to introduce bond notes had made investors jittery.
“We know that Zimbabwe is viewing bond notes as a way to introduce its own currency. People do not trust the official banking channels because banks run out of cash,” Roodt said. IOL