Policy Interventions for Economic Development through Diaspora Remittances in Zimbabwe

Abstract

The study investigated the relationship between diaspora remittances and economic growth for Zimbabwe. Time series data for the period from 1990 to 2019 were used. The study employed the error correction model (ECM) to determine the relationship between diaspora remittances and economic development. Real GDP was used as a proxy variable for economic development. Data from World Bank database was used. The study found diaspora remittance to be statistically significant in explaining economic growth. The study, therefore, recommend that Zimbabwe should put formal structures to tap in all flows from diaspora remittances. Furthermore, tax charged on remittances should not be discouraging for those who intend to send in their remittances. A clear policy must be put in place and opened to the public on the spending of income earned as a result of remittances. A significant share on expenditure of remittances earned must be directed towards social amenities. The Reserve Bank of Zimbabwe must endeavour to eliminate bottle necks in the processing of remittances as this act to the negative of remittances inflow.