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Zimbabweans abroad sent record amounts of money home in 2020 (Photo: Reuters)

Surge in remittances boosts Zimbabwe economy, central bank says

Zimbabweans abroad sent record amounts of money home in 2020 (Photo: Reuters)

Zimbabweans living abroad almost doubled the amount of money they sent home this year, bolstering the economy, Central Bank Governor John Mangudya said.

Governor of the Central Bank of Zimbabwe John Mangudya (Photo: Christopher Goodney/Bloomberg)

Remittances jumped to US$411.1 million in the first four months of the year, compared with US$221.9 million a year earlier, Mangudya said by phone Wednesday from the capital, Harare. The inflows are Zimbabwe’s second-biggest source of foreign-exchange earnings, after revenue from platinum exports.

“The economy continues to rebound due to the stability of the currency and inflation on account of the good agricultural out-turn and the positive impact of the diaspora remittances,” Mangudya said.

A pedestrian passes Western Union and MoneyGram International stores. (Photo: Bloomberg)

Reforming Zimbabwe’s economy

Economic reforms implemented by Finance Minister Mthuli Ncube and the central bank over the past three years have helped rein in annual inflation to 162 per cent, from a peak of 837.5 per cent in July. The depreciation of Zimbabwe’s dollar has also slowed, with the currency weakening 3.9 per cent against the US currency this year, compared with a 79 per cent slump last year, according to data compiled by Bloomberg.

Central bank reforms, including the introduction of a currency auction, have increased the supply of foreign exchange in Zimbabwe, according to Coronation Fund Managers Ltd., one of the biggest asset managers in neighboring South Africa. That’s helped make it easier for foreign investors in companies like Delta Corp., Zimbabwe’s biggest company by market value, and Econet Wireless Zimbabwe Ltd., it’s largest mobile operator, to repatriate funds from Zimbabwe, said Lloyd Mlotshwa, head of research at Harare-based brokerage IH Securities Ltd.

Depreciation of Zimbabwe’s dollar has also slowed, with the currency weakening 3.9 per cent against the US currency this year, compared with a 79 per cent slump last year, according to data compiled by Bloomberg. (Photo: Daily Express)

While the improving economic indicators have raised optimism about the outlook for the economy, the International Monetary Fund cautioned last month that broader reforms are needed to sustain the gains the authorities have made. The IMF expects Zimbabwe’s economy to grow 3.1 per cent this year — less than half the 7.4 per cent the nation’s Treasury has projected.

A history of stagnation

Zimbabwe’s economy has stagnated for two decades because of political and economic turmoil, and a bout of hyperinflation in 2008 wiped out savings and saw investors exit the country.

The International Monetary Fund expects Zimbabwe’s economy will grow 3.1 per cent this year — less than half the 7.4 per cent the nation’s treasury has projected. (File photo)

Remittances last year totalled US$1 billion, compared with US$635.7 million in 2019. The inflows were second only to platinum exports, which generated US$1.77 billion, according to central bank data