How does an economy in which the annual
inflation rate is 2 million percent and rising, and 90 percent of
the population is without formal employment keep going? The country
is, of course, Zimbabwe and the answer is the lifeline offered by
international remittances into the country.
inflation rate is 2 million percent and rising, and 90 percent of
the population is without formal employment keep going? The country
is, of course, Zimbabwe and the answer is the lifeline offered by
international remittances into the country.
The vital importance of remittances to Zimbabwe
was highlighted by the International Association of Money Transfer
Networks (IAMTN) which has revealed that a remittance company
operating in Zimbabwe has confided that up to $1.5 million a day
moves into the country in remittances.
was highlighted by the International Association of Money Transfer
Networks (IAMTN) which has revealed that a remittance company
operating in Zimbabwe has confided that up to $1.5 million a day
moves into the country in remittances.
“I happen to know our source well, but in the
present climate it is not safe to divulge the identity,” said IAMTN
CEO Olga Maitland.
present climate it is not safe to divulge the identity,” said IAMTN
CEO Olga Maitland.
Western Union is the principal company
operating in Zimbabwe’s remittance market but can only operate with
the blessing of the country’s reserve bank. All other remittance
companies operate in what the IAMTN termed the ‘parallel market’
where the Zimbabwean dollar is traded at its true value rather than
that dictated by the reserve bank.
operating in Zimbabwe’s remittance market but can only operate with
the blessing of the country’s reserve bank. All other remittance
companies operate in what the IAMTN termed the ‘parallel market’
where the Zimbabwean dollar is traded at its true value rather than
that dictated by the reserve bank.
At present the parallel market value of the
currency is 50 percent below the official rate of ZWD19.5 billion
per US dollar.
currency is 50 percent below the official rate of ZWD19.5 billion
per US dollar.
The IAMTN explained that the parallel market
has been allowed informally by the government to function because
it is a useful source of badly needed foreign exchange.
has been allowed informally by the government to function because
it is a useful source of badly needed foreign exchange.
“Remittance operators sell their foreign
exchange to the reserve bank in exchange for Zimbabwe dollars at
exceptionally good rates – in effect colluding with those who seek
to destroy them,” said the IAMTN.
exchange to the reserve bank in exchange for Zimbabwe dollars at
exceptionally good rates – in effect colluding with those who seek
to destroy them,” said the IAMTN.
“What is clear is that the remittance market
through one way or another has been the key source of survival for
many people fortunate enough to have friends and relatives outside
the country to help them,” said Maitland.
through one way or another has been the key source of survival for
many people fortunate enough to have friends and relatives outside
the country to help them,” said Maitland.
“Indeed it has been our experience that
remittance sending tends to increase during times of internal
strife, natural disaster or conflict.”
remittance sending tends to increase during times of internal
strife, natural disaster or conflict.”
Not surprisingly, the IAMTN noted that normal
money transfer channels in Zimbabwe have suffered because “huge
swathes” of regular clients have moved to the unregulated
systems.
money transfer channels in Zimbabwe have suffered because “huge
swathes” of regular clients have moved to the unregulated
systems.
According to the IAMTN’s source this situation
will continue until normal stability returns to Zimbabwe. If
normality were to be restored the source believes the currency
would be floated against the US dollar and remittances through
normal channels would soar as a result of funds being sent to
rebuild the country.
will continue until normal stability returns to Zimbabwe. If
normality were to be restored the source believes the currency
would be floated against the US dollar and remittances through
normal channels would soar as a result of funds being sent to
rebuild the country.
