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Zimbabwe keeps going thanks to remittances

According to a press release from the International Association of Money Transfer Networks, Zimbabwe’s economy keeps going thanks to mobile remittances, even with an economy where inflation is
currently running at two million percent and is expected to reach six million percent by the end of June.

Less than 10% of the population is employed and a huge food
crisis looms ahead.

The answer is that the remittance market has been the
lifeline for thousands in Zimbabwe.

A remittance company operating in Zimbabwe says that up to US$1.5m a day moves into
the country in remittances. Western
Union is the principal company but can only operate with the blessing of the
Reserve Bank. The rest operate on the
‘parallel’ market, meaning the financial market running at the true value of
the Zimbabwean dollar, rather than the declared Government rate of exchange,
which today is running at 50% of the market rate.

The parallel market has been allowed informally by the
Government to function being 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.

Not surprisingly normal money transfer channels have
suffered – as huge swathes of regular clients have moved to the unregulated
systems. Apart from the fact they get a
better rate of exchange, under the normal KYC rules they have also been fearful
that their identities would be passed to the Government which at a time of
intimidation and retribution could bring danger to themselves and their
families.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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