Featured - Finance - Top Stories - March 25, 2021

Remittances play a critical role in economic growth: Chitambara

The 2021 Monetary Statement Policy issued last month projects that diaspora remittances would close the year at US$940 million following a record of US$1 billion last year which surpassed US$635,7 million realised in 2019.

In his 2021 Monetary Policy Statement Reserve Bank of Zimbabwe Governor, Dr John Mangudya, attributed the improvement in Diaspora remittances to the liberalisation of the use of free funds in the country and improved routing of remittances through formal channels.

Approximately, Zimbabwe’s Diaspora population has surpassed three million, predominantly in South Africa, United Kingdom and Australia and their contribution to the economy have multiplier effects of inducing savings and investment.

In an interview with BusinessMail, Development Economist Prosper Chitambara said remittances overpass the disproportion between income and consumption, therefore posing a positive direct impact on the Gross Domestic Product (GDP) and Zimbabwe’s standards of living.

“Remittances play a critical role in economic growth and sustainable development, they provide a pool of savings that can be channeled towards investment projects.

“They also play a critical social production role which helps to mitigate the high level of poverty,” Chitambara said.

He also stated that on a positive note, last year remittances were at record level even though the world was shaken by the unmatched effects of COVID-19.

“There is need to create a more conducive and supporting environment, framework for remittances to play for even a greater role towards sustainable development and learning also from best practices in other countries,” Chitambara said.

The National Development Strategy 1 stipulates that while remittances are almost universally affirmed as an important gain to recipient countries, harnessing knowledge and skills from specialized skills in the diaspora is equally important in the recipient countries.

 

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