Story by Yolanda Moyo
ZIMBABWE’S financial services sector is experiencing an increase in investments driven by the diaspora remittances which rose by 18 percent during the first quarter of the year.
Diaspora remittances have emerged as a major driver of investments in the country’s financial services sector after they rose by 18 percent to over US$490 million in the first quarter of the year compared to US$420 million during the same period last year.
The latest development has left economic analysts convinced that the move will oil the economy in the line with the second republic’s growth targets.
“Remittances are a critical source of foreign currency for Zimbabwe. This influx of capital is being deposited into banks and mobile money platforms, providing the much-needed liquidity for financial institutions to lend to businesses and individuals. The increased liquidity allows banks to offer a wider range of financial products, including loans for entrepreneurs, mortgages, and investment opportunities. This, in turn, stimulates economic activity as businesses expand, new ventures are created, and consumers have greater access to credit,” said economic analyst, Mr Marlon Gwadu.
Another economic analyst, Mr Stevenson Dlaminiv weighed in, “This influx of cash is driving a number of positive developments. Banks are seeing an increase in deposit accounts, as recipients of remittances look for secure places to save their money. Microfinance institutions are also benefiting, as remittance recipients use the funds to invest in small businesses and income-generating activities.
“It has played a significant role and this is also impacted by the policy changes by government to liberalize that sector and give rise to the growth of these small to medium scale that offer these remittances. It is also evidence of government’s drive towards financial inclusion which is one the mandates or objectives of the central bank. All these have given rise to the growth in the financial sector to the growth in remittances.”
Financial services companies are also on the increase offering innovative financial products and services designed to meet the evolving needs of Zimbabweans, hence empowering the broader population with greater financial inclusion.
“Key to this development of remittances is financial inclusion. Remittances make use mostly of the fintech space that is also accelerated and in that way most of the traditional unbanked and underbanked societies have managed to access finances through these services. This increased efficiency and accessibility are driving financial inclusion key in the development of local economies, particularly in previously underserved areas,”
The additional disposable income by remittance recipients translates to increased consumer spending, stimulating various sectors of the economy.
