Remittances to Zimbabwe

In a recent article, it is reported that the cost of living in Zimbabwe continues its climb but the importance of money sent home by relatives abroad is still drastically needed.

Fifty percent of the households investigated across all of the income groups in the main cities of Harare and Bulawayo are regular recipients of money and goods from relatives living outside of the country. This is according to “Remittances, Poverty Reduction and Informalisation.”

It is noted that parents are normally supported by their children through funds sent via transfer networks, according to the Global Poverty Research Group. The networks take advantage of the market in which US $1 is worth $500,000 Zim, compared to the official rate of $100,000 Zim.

An interview with an engineering student states that he manages to stay in school thanks to relatives in South Africa. He goes on to say that since January, many of his classmates have dropped out due to financial problems, “I do not even think we would be accessing the food we eat if it was not for the groceries they send.”

The average salary in Zimbabwe is Zim $20 million, but the monthly cost of a basic food basket for a family of has risen to Zim $60 million, up from Zim $49 million. In US dollars this would be an increase from US $490 to US $600. Economist James Johwa recently stated during an interview, “Remittances played a key role in stabilizing household food security and access to essential services like education and hospital care.”

This dependency is not just for the lower income or poverty level – a government registry clerk states that she is equally dependent on money sent by her husband in Botswana. “My own salary cannot even buy half of what he sends. He sends money every month and that is basically how the family has managed to survive the crisis.”

For six straight years, Zimbabwe’s economy has been in recession. Unemployment is over 80 percent and inflation has far exceeded 1,200 percent. The informal sector that supported the livelihoods of the urban poor was demolished by the government in a 3-month span.

Johwa states, “Those receiving money and goods from the diaspora can afford such luxuries as cars; they can buy houses that are seen as prohibitively expensive in the local context. This is a small but financially sound class that has emerged alongside a growing poor class that can hardly put one day’s meal together.”

He further goes on to state, “There are stark differences in terms of access to food, goods and services,” said Johwa. “And the reality is that the majority of Zimbabweans are sliding deeper and deeper into hunger and poverty every day.”