Remittances have dropped over the years, from 58% of adults remitting in 2014 to 38% in 2022, says the Reserve Bank of Zimbabwe (RBZ).
RBZ’s 2022 FinScope MSME and Consumer Survey Results show that the drop has been mainly in domestic remittances.
By definition, domestic remittance refers to a settlement mode in which the payer remits money to the payee through the Bank. Through the remittance transaction, the money in the customer’s fund account can be transferred to settlement accounts such as intra- and inter-city bank cards in our bank or other banks.
Those who have remitted mainly used other formal channels, according to the report. This comes as there has been an increase in armed robberies, and the formal channels have proved to be secure and convenient.
“Cross border remittances have increased but domestic remittances have drastically reduced,” reads the report.
“Almost half of the adults have remitted money locally to their loved ones compared to 2014. Could it be the impact of Covid-19 on livelihoods, low incomes or non-operation of mobile money agents.”
Domestic remittances, or money sent to family members or friends within Zimbabwe, are an important component of the economy and one of the most widely used financial services by Zimbabweans.
“Among those who reported having sent or received money domestically, mobile money is the main channel being used. Money transferring companies such as Mukuru, Hello Paisa, WorldRemit are also used for domestic remittances but playing a key role in cross-border remittances,” stated RBZ.
Economist Yona Banda said it would be fair to attribute the low domestic remittances to the general macroeconomic environment.
“It is an increasingly informal economy, and informal traders tend to prefer mobile money or cash for their transactions. On the other hand, it could be viewed as a failure of the local banking sector to adjust to the demands of the local market by offering more convenient or cost appropriate services,” he said – Harare