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.
Newsday
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