Channel Remittances Towards Investments, Diasporans Urged
Economic analyst, Victor Bharoma has urged Zimbabweans in the diaspora to channel some of their remittances towards investments to boost economic growth and improve the country’s forex reserves.
In an opinion piece widely shared in the local media, Bharoma said most remittances have been going towards domestic consumption, largely because of liquidity challenges affecting households and the country at large, calling on the diaspora community to consider investments back home.
“For the past three years, remittances from Zimbabweans living abroad have been averaging $1 billion. This figure only accounts for funds sent home through official banking channels, as such the figure may be less than 70% of the actual remittances into our nation as some funds are moved via traditional channels.
“The amount has been growing exponentially from $552 million recorded in 2012 to over $935 million recorded in 2016 as a result of RBZ incentives to lure diaspora funds. RBZ currently gives a 10% incentive for all funds remitted back home. Remittances are now the second largest source of liquidity (more than Tobacco Exports) in the country after Mineral Exports,” said Bhoroma.
He called for tax breaks for special economic zones investments to attract investment which he said is important is turning around the country’s economic fortunes following years of plunder and isolation.
“Current engagements of the Diaspora community by the President and RBZ have shown that the diaspora community is keen to invest in Zimbabwe in areas such as Transport, Agriculture processing, Health Services, Insurance, Manufacturing and Tourism apart from the obvious Property Sector,” he said.
“Zimbabwe has vast tracts of land in Bulawayo, Victoria Falls and Harare set aside for Special Economic activities under the SEZ Act of 2016. Most of the land is lying idle owing to liquidity and investment challenges the country is facing. Breaks on Capital Gains Tax, Corporate Tax and VAT to diaspora investors can lure capital.
“The major advantage of such a move is that dividends will stay home as opposed to FDI where they are repatriated outside. Further, the directors are subject to taxing on all their earnings or expenditure after a specified period,” added Bharoma.
According to latest figures, an average of $1 billion has been send into the country through official banking channels with analysts of the opinion that a lot more could have come through other informal channels.