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Expat Zimbabweans remit $1bn back home

Feb 04 2016 13:42
Memory Mataranyika, Fin24

Harare - Expat Zimbabweans living and working in other countries such as South Africa, the United Kingdom and the United States remitted nearly $1bn back home in 2015, accounting for nearly half of foreign inflows into the cash-starved economy.
Zimbabwe is battling a liquidity crunch that has been worsened by growing weakness in the currencies of major trading partners, the South African rand and Chinese yuan.
Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya said on Thursday that there has however been an increase in instances of illegal externalisation of funds by both individuals and companies.
“The current scenario in Zimbabwe - for example, where firms, especially those in the extractive sectors, and individuals are externalising funds, including export sales proceeds - defies economic logic,” he said in his Monetary Policy Statement for 2016.
Remittances by Zimbabweans in the diaspora amounted to $935m in 2015, he said, “which is about 48% of total remittances which were about $2bn” during the same year.

Bad loans and defaults
However, in 2015, said the central bank, as much as $684m was externalised by individuals for various purposes that include donations, investments and account transfers among others.
“In addition, $1.2bn export sales proceeds were externalised by firms,” the central bank said.
Zimbabweans have also been shunning the formal banking sector although profitability in the industry had improved, with about 15 banks notching up $127.4m in aggregate net profit. Only three banks made losses in 2015, said the policy statement.
The losses by the three banks have been attributed to “increased provisioning for bad and doubtful debts” which “however, weighed down on their performance," resulting in losses.
Bad loans and defaults are also on the decline, with the non-performing loans to total loans ratio declining markedly from 20.45% in September 2014 to about 10.87% by the end of December 2015.
The central bank has also now put in place measures to promote the usage of plastic money and online banking. It has also sought to tighten policy measures on usage and carriage of large amounts of cash by both businesses and individuals.
“Prior reasonable notice of not less than a day should be given to financial institutions for all cash withdrawals of an equivalent amount of above $10 000,” Mangudya said.
Zimbabwe is forging ahead with reforms of its banking sector to improve stability and transparency and a bill currently awaiting President Robert Mugabe’s approval will jail reckless bank managers in the event of bank collapses.

Zimbabwe has been hit with bank failures in the past four years, most of them blamed on poor corporate governance and insider loans.

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zimbabwe  |  africa economy  |  expats



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