By Melanie Robinson and Niculin Jaeger
The World Bank says remittances to low and middle income countries will fall by 20 percent in 2020 because of coronavirus. The UK and Switzerland are taking action.
The coronavirus pandemic and its economic effects pose a serious threat to remittance flows to Zimbabwe. Each year, Zimbabwean expats send millions of dollars in cash and groceries to their families back home, helping them meet food, education, housing and health needs, and cope with unexpected financial shocks.
This support is significant: in 2018 the World Bank put the figure of total remittances sent back to Zimbabwe at $1.9 billion or $125 per person. Zimbabwe is believed to be the third largest receiver of remittances from the UK after Kenya and Nigeria.
It’s not just ageing parents who benefit: professionals in the diaspora often support their extended communities as well. UK-based footballer Marvelous Nakamba has spoken of paying school fees for hundreds of children in his hometown of Hwange. As anyone familiar with the vibrant UK Zimbabwe Achievers Award run by entrepreneur and publisher Conrad Mwanza will know, Nakamba is far from the only one.
Cash sent from South Africa is another crucial link in the remittance chain, since that’s where the majority of Zimbabweans in the diaspora live. Amounts sent back across the Limpopo are a crucial contributor to family and community resilience in Zimbabwe, with an average of ZAR 1,000 winging it home per transaction in 2018.
The last three months have been worrying times for those who send and receive remittances. Data shows remittance inflows to Zimbabwe have fallen by two-thirds since March. Lockdown-linked restrictions on movement in some host countries may have made helping those back home harder for Zimbabweans who need to make a trip to money transfer companies to send cash.
The closure of the normally busy South African border post has temporarily closed this northbound channel for goods and other help in kind. And recipients in Zimbabwe, which has been under lockdown since the end of March, may have found it harder to cross towns or cities to reach money transfer agencies to access their cash.
What comes next may be even more serious. The World Bank predicts that the global economy will shrink by 5.2 percent in 2020, and remittances to low and middle income countries will fall by 20 percent. The full impact of the worldwide recession on jobs and livelihoods is yet to be felt, but Zimbabweans working in the informal sector in South Africa have already reported job losses.
In Switzerland and the UK, the governments have taken significant steps to mitigate the effects of coronavirus and prevent mass redundancies, including schemes that allow employees to receive up to 80 percent of their monthly wages that employers would otherwise be unable to maintain.
Recognising that a reduction in remittances could significantly threaten the progress countries like Zimbabwe have made on achieving the Sustainable Development Goals, the UK and Switzerland are leading the Global Call to Action to protect these vital cross-border financial flows. Together we want to make it easier for Zimbabweans – and all those from low and middle income countries – to continue to send money home, including through new digital channels.
To that end, we’re calling on policy makers to declare remittances an essential financial service. The UK did this in April, helping to mitigate a decline of cash flows in the UK-Zimbabwe corridor. We’re asking regulators to ease regulatory and licensing requirements and to help banks continue to provide remittance banking services during the crisis. And we’re calling on remittance service providers to look at ways of cutting transfer costs and making it more attractive for remitters to send money home.
Switzerland is supporting the development of new technologies to transfer money abroad, for instance via mobile phone, as well as micro-insurance and savings schemes that allow migrant workers to send money home and invest their savings with a single click. The Global Call to Action will adapt these new digital channels to best fit the countries they are designed to serve and use information campaigns to raise migrants’ awareness of their existence.
As we mark the UN’s International Day of Family Remittances, we’re delighted that Zimbabwe recently signed up to the global call to action on remittances. This will mean that Zimbabwe too has access to up-to-date advice and support to ensure this crucial lifeline can be kept open to the benefit of Zimbabweans in-country and their families and friends across the world.
The Zimbabwean expats we hear from are unanimous in their determination to carry on supporting their families and communities back home. “We’re obliged to look after our loves ones,” a senior university lecturer based in London said. “They invested in our education and we endeavour to give back. Supporting families is a must for us all.”
We are in this together.
Melanie Robinson is the UK ambassador to Zimbabwe.
Niculin Jäger is the Ambassador of Switzerland to Zimbabwe, Malawi and Zambia.