Finance, Economic Development, and Investment Promotion Permanent Secretary George Guvamatanga said that the government has no intention of seizing remittances and will continue to treat them as free funds.
Speaking at the Zimbabwe Economic Society and Friedrich-Ebert Stiftung (ZES/FES) mid-term budget breakfast meeting in Harare on August 21, Guvamatanga said these free funds also include funds from NGOs, salaries for diplomatic missions, and other uses.
He said the government was aware that altering the current approach would lead to significant and unnecessary disruption in the market. Said Guvamatanga:
For years, remittances in this country have been treated as free funds. It is your money.
It is given to you in the form you want and you use it as you, please. The Government has no intention whatsoever to change that position.
We have no intention to tamper with anything called free funds and that is the Government’s official position.
This follows remarks by Reserve Bank of Zimbabwe (RBZ) Deputy Director William Mamhimanzi, which sparked controversy last week when he suggested that banks and money remittance agencies should convert diaspora remittances into the local ZiG currency.
Speaking at an event in Harare, Mamhimanzi argued that diaspora remittances are fueling the informal sector and proposed that the central bank develop policies to withhold these remittances, paying recipients instead in local currency. He said:
Where does the informal sector get its money from? One big source of this money is your remittances. When someone receives money from external sources, from relatives, they immediately get that money in hard currency.
And once people get that hard currency in cash, you know it’s not going to the bank. It goes into Mbare Musika, it buys steel and it goes wherever.
So we need to find ways of tapping that money to make sure that it doesn’t leave the bank. It doesn’t leave the remittance institution, or it leaves as local currency at some point.
A few days later, RBZ Governor John Mushayavanhu clarified that the central bank does not plan to implement a policy requiring recipients of diaspora remittances to convert their funds into the ZiG currency. Said Mushayavanhu:
The Reserve Bank would like to assure the public and all stakeholders that recipients of diaspora remittances will NOT be FORCED to change their free funds at the point of collection and at any other time.
However, some citizens believe that a policy change is imminent, arguing that Mamhimanzi prematurely revealed intentions that may soon lead to the mandatory conversion of diaspora remittances into ZiG.
They point to President Emmerson Mnangagwa’s recent statement that ZiG will become the sole legal tender within two years as a possible catalyst for this shift.
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