eBusiness Weekly
Martin Kadzere
Remittances from the Diaspora have been one of the major sources of foreign currency in Zimbabwe, ahead of foreign direct investment (FDI), loans and official direct assistance (ODA), yet few incentives have been provided to boost migrant investment from Zimbabweans living abroad.
Last year, remittances reached a record level after increasing 42,7 percent to US$1,43 billion.
ODA, loans and FDI amounted to US$976 million, US$876 million, and US$91 million respectively, according to statistics from the Reserve Bank of Zimbabwe (RBZ).
In recent years, international Diasporas have emerged as an important community to assist countries in advancing their development and as a critical source of finance.
In Africa for instance, countries such as Ethiopia have immensely benefited from migrant investment.
Two months ago, Ethiopia switched on the power generator at the Grand Renaissance Dam, which was funded to the tune of US$4,8 billion, with a significant portion of the money having been raised from the diaspora.
According to UK Aid, the Diasporas are the biggest investors in Nigeria’s education sector.
Elsewhere, China, Korea, and India are among countries that have shown Diaspora contributions can significantly help to transform economies.
The approaches adopted by these Asian giants point to country-driven initiatives built on shared development objectives between the government and the Diaspora, and underlined by comprehensive policies, administrative structures and incentives to foster an enabling environment for mobilising Diaspora resources (expertise, investments, entrepreneurship and corporate affiliations) around critical growth pillars.
Analysts say Diasporas should now be considered not just as sources of financing, but as development partners. According to the AfDB, a stronger relationship between African countries and the African Diaspora is appropriate and urgent.
“Remittances into Zimbabwe have demonstrated to be a major source of investment but has been concentrated in the housing sector and consumption,” economist, David Ndiraya told Business Weekly.
There is a need for policy instruments that encourage investment into diverse productive sectors of the economy.”
There is anecdotal evidence that the urban housing development in Zimbabwe is largely driven by diaspora remittances. This is based on information obtained from various sources in the construction sector including brick and cement manufacturers.
Savings from Zimbabweans abroad remain largely untapped with most remittances arriving in the form of cash and goods with little invested in the productive sectors.
“There are, however, many opportunities which can be opened up for migrant capital in sectors such as mining, manufacturing, health as well as financial instruments such as bonds,” said Ndiraya.
This week, the Government-appointed an Inter-Ministerial Committee chaired by the Ministry of Foreign Affairs and International Trade to review the National Diaspora Policy and develop robust strategies and interventions for diaspora engagement and re-engagement. Furthermore, the committee will have sector-specific sub-committees mandated to deal with issues in any sector of the economy.
“The development of a comprehensive policy and strategies will unlock knowledge and skills transfer; diaspora direct investment; and philanthropic works, acting Information, Publicity and Broadcasting Services Minister Jenfan Muswere told reporters after a Cabinet meeting.
“Government, on the other hand, will avail industrial shells and land to eligible diasporas for the construction of specialist hospitals and industrial parks and any other areas or sectors. The Government will also facilitate the establishment of joint ventures between diasporans and landowners for the production and export of high-quality agricultural products and any other sector for investment.”
Economist Professor Gift Mugano said the diaspora policy should centre on various investment vehicles and incentives to attract capital from people living abroad.
“We need to create sector-specific investment vehicles in sectors such as housing, infrastructure development, health and education and offer opportunities in special economic zones,” said Prof Mugano in an interview.
“They need to be offered opportunities tourism sectors and they can country’s ambassadors who then encourage visitors to come.” Prof Mugano said the policy should also encourage Diasporas to deposit their savings with local banks.
“This is very possible because the interest rates in Europe are very low and they can be offered rates, which are relatively higher.
However, the only challenge is that people have no trust in our financial systems given the currency reforms that the country went through, which resulted in people losing their money. But international financial institutions can be engaged to guarantee the deposits from the diaspora.
“Most of the diaspora left the country because of push factors; it’s a bitter community and all we need to do is to put in place incentives to encourage them to invest home.”
