Diaspora remittances key source of funds

Published: 30 May 2014

THE country can benefit from remittances from Zimbabweans abroad as they have become a key source of funds, the Permanent Secretary in the Ministry of Finance and Economic Development, Willard Manungo, said in Bulawayo yesterday.

Addressing delegates to the Third Zimbabwe Pension Funds Investment Forum in the city, Manungo said it is estimated that last year the country received $1,8 billion in remittances.

"Diaspora remittances have grown to become an important source of funds that can be leveraged for national development and government is working with financial institutions in the issuance of Diaspora bonds. Treasury will grant the normal features of the bonds which are prescribed asset status, tax exemption and liquid asset status," he said.

Manungo challenged local pension funds to play a leading role in mobilising resources and participating in the development of the economy.

"While it is acknowledged that the critical role of pension funds is the provision of social security upon retirement, pension funds should play an active role in mobilising resources for economic development," he said.

Manungo said the pension funds should support the projects which are in the government's five-year economic blueprint Zim-Asset to ensure the success of the policy.

"Given that we now have Zim-Asset, pension funds should come in through the provision of assets from which the economy can draw resources for important development projects such as housing (which has a direct link to the contributors), agriculture, power generation (mini-hydro plants) and other critical infrastructure such as roads on a BOT or Joint Venture basis," he said.

Manungo said the pension funds could take advantage of investment opportunities availed in the Zim-Asset which also provides readily available markets for different products and services.

"You should consider taking advantage of the opportunities availed in the Zim-Asset, for example the energy sector (Batoka Hydro Power Station) requires $2.4 billion which is a good investment opportunity and provides a readily available market," he said.

Manungo said it is important for locals to invest their money in different sectors so as to attract and boost foreign investor confidence.

"If our local pension funds invest their money in the development of the economy it will boost foreign investor confidence who will in turn invest in our projects," he said.

Manungo said there are other projects which are suitable for joint ventures and Public, Private Partnerships (PPPs) in the areas of transport and water and sanitation.

"There are opportunities for joint ventures and PPPs, for example the transport sector (road dualisation) needs $3.027 billion while water and sanitation sector (dam construction and water treatment plants) needs $1.776 billion," he said.

Manungo said the banking sector should also play a role in the mobilisation of domestic savings to ensure the protection of the country's deposits.

"The banking sector should also play their role in the mobilisation of domestic savings. While it is noted that one of the challenges that deter the maximum mobilisation of savings by the banks is the hangover effects of the changeover from the Zimbabwe dollar to the multi-currency system, banks should address the issue of interest rates for people to value postponing current consumption," he said.

The government on its part, he said, had ensured that the country's deposit protection framework is strengthened through the creation of the Deposit Protection Board.
- chronicle