RBZ moves to counter illegal channels: Increases Diaspora remittances incentive

RBZ governor John Mangudya

RBZ governor John Mangudya

Oliver Kazunga, Senior Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) has increased incentives for Diaspora remittances from three percent to 10 percent effective August 1, 2017 to encourage channelling of remittances through formal channels.

RBZ Governor, Dr John Mangudya, revealed this in the mid-term monetary policy statement that was presented on Wednesday.

The central bank introduced the Diaspora Remittances Incentive Scheme (DRIS) last year to benefit both the money transfer agents and the receiver of the funds on the basis of a two percent and three percent split to reduce the cost of receiving and sending remittances.

Dr Mangudya said incentives for money transfer agencies and remittances received as cash would remain at two percent and three percent respectively.

“DRIS has attracted international remittances to flow through formal channels, but informal remittances are still high,” he said.

“In order to enhance financial inclusion for remittances recipients, the bank shall increase the DRIS for remittances received through banking or wallet accounts from three percent to 10 percent, with effect from August 2017.”

RBZ has also come up with mechanisms to curb fraudulent activities orchestrated by residents using international debit cards to cheat on the diaspora remittances.

When the remittances scheme was introduced, some Zimbabwean residents used international debit cards to withdraw money in regional countries and send it back to themselves through agents such as Mukuru and Western Union, using relatives and friends to earn the remittances bonus.

Dr Mangudya also urged authorised dealers to continue exercising financial discipline and integrity in the allocation of foreign exchange among competing demands.

He said authorised dealers were expected to prioritise the importation of raw materials and other inputs, critical for increasing local production and exports.

Meanwhile, domestic credit recorded an annual increase of 21.10 percent from $6 978.7 million in May 2016 to $8 451.4 million in May 2017. The growth was largely due to a 38.67 percent annual expansion in net credit to Government.

“The surge in net credit to Government is consistent with increased recourse by Government to domestic sources of financing, on the back of reduced revenue collections,” said Dr Mangudya.

He said the growth in credit to Government also reflected the banks’ holding of Treasury bills that were largely bought at a discount on the secondary market.

Credit to the private sector recorded a modest growth of 1.99 percent from $3 426.9 million in May 2016 to $3 495.1 million in May 2017. — @okazunga.

Article Source: The Chronicle