By Business Reporter- The President Emmerson Mnangagwa administration is now banking on the diaspora remittances, which have surged by 7.5 percent to US$165 million from US$153.8 million, as the economy continues to struggle.
This increase highlights the critical role of remittances as a key foreign currency inflow supporting an economy plagued by currency instability, policy missteps, and declining investor confidence.
The remittances come from a large pool of Zimbabweans living and working abroad, primarily in South Africa, the United Kingdom, the United States, Australia, Canada, and the United Arab Emirates.
These funds act as a financial lifeline for millions of Zimbabwean households, sustaining daily expenses, education, healthcare, and small businesses.
With limited access to concessional funding from global lenders such as the International Monetary Fund (IMF) and the World Bank, remittances provide critical liquidity to sustain consumer demand and industrial activity.
Zimbabwe remains largely excluded from global financial markets due to decades of economic mismanagement, corruption, and the impact of Western-imposed sanctions.
Mnangagwa’s Economic Failures and the Currency Crisis
Since President Emmerson Mnangagwa took power through a military coup in 2017, his administration has failed to deliver on promises of economic revival.
Despite pledging market-friendly reforms, Zimbabwe continues to grapple with runaway inflation, exchange rate volatility, and unsustainable government spending.
Zimbabwe’s economic troubles date back to the early 2000s when hyperinflation, largely driven by land reform policies and excessive money printing, led to the collapse of the Zimbabwean dollar (ZWD).
By 2009, the government was forced to abandon the local currency in favor of a multi-currency regime dominated by the US dollar.
However, Mnangagwa’s government reintroduced a local currency in 2019—the Zimbabwean dollar (ZWL)—amid much skepticism.
The ZWL rapidly lost value, exacerbating inflation and public distrust.
In 2022, the government attempted to stabilize the economy by introducing gold-backed digital tokens (ZiG), but the initiative failed to restore confidence as inflation soared beyond control. Several other currency interventions, such as the Bond Notes introduced in 2016, also failed due to underlying economic mismanagement and lack of trust in the financial system.
Amidst these failures, diaspora remittances have become one of the few reliable sources of foreign exchange, surpassing export revenues from key industries like agriculture and mining.
In 2024, Zimbabwe recorded a record US$2.2 billion in remittances, a 22 percent increase from the previous year.
Zimbabwe National Statistics Agency (ZimStats) data indicates that nearly 2 million Zimbabweans live in the diaspora, with South Africa alone hosting approximately 908,913 migrants.
The UK, Botswana, and the US also account for a significant number of Zimbabwean expatriates who send funds home regularly.
These remittances play a crucial role in stabilizing the foreign exchange market and mitigating the effects of economic mismanagement.
Beyond household support, they have the potential to bridge infrastructure financing gaps and support national development projects through diaspora bonds—an initiative the government has struggled to implement effectively.
The central bank has acknowledged the importance of remittances and has pledged to introduce incentives to increase inflows.
However, the government’s continued failure to implement sound fiscal and monetary policies raises concerns about the sustainability of economic recovery efforts.