Source: Zim to benefit from surge in remittances – herald
Nqobile Bhebhe
Zimpapers Business Hub
Zimbabwe is among countries positioned to benefit immensely from a projected surge in remittance inflows into Africa, with the African Development Bank (AfDB) forecasting that the continent will receive US$100 billion this year
The trend is expected to triple by 2035, reaching a staggering US$283 billion.
According to the AfDB’s 2025 African Economic Outlook (AEO) launched at the bank’s annual meetings in Abidjan, Côte d’Ivoire, this week, remittances and the formalisation of business activities are now recognised as vital levers for inclusive growth and domestic resource mobilisation across Africa.
“Africa is expected to attract about US$100 billion in remittance inflows in 2025, and the formal remittance market could reach a lower bound of US$283 billion by 2035, a threefold increase from 2023,” the bank said.
However, AfDB cautioned that high remittance transfer costs continue to drive a huge portion of funds through informal channels, limiting the full economic impact of these flows.
“High remittance costs promote transfer through informal channels, which range from 35 to 75 percent of resource transfers through formal channels, with Africa on the higher side.”
In line with the United Nations Sustainable Development Goals, the report underscores the importance of reducing transaction costs to encourage formalisation.
“Reducing the cost of remittances from about 7 percent in 2023 to 3 percent by 2030, a target set by the United Nations Agenda on SDGs, could crowd-in informal transfers to the formal remittance market,” reads part of the report.
Zimbabwe continues to make headway in this area, having recorded US$2,2 billion in diaspora remittance inflows in 2024, up 22 percent from US$1,8 billion the previous year.
The diaspora has become a key development partner, with its remittances providing a critical source of foreign currency and liquidity for the domestic economy.
“These funds are not only cushioning families, but are also helping stabilise the foreign exchange market and bridging gaps in infrastructure financing,” said economist Mr Honest Ngwenya in an interview.
“Zimbabwe should be proactive in formalising these flows, especially through innovative financial instruments like diaspora bonds. There’s an untapped investment appetite among Zimbabweans abroad.”
Mr Ngwenya added that formal remittance channels create traceability and multiplier effects. “When funds come through the formal system, they don’t just end with household consumption. There is evidence that up to 30 percent of these flows can be reinvested in productive activities, such as agriculture, real estate and even small and medium-sized enterprises (SMEs). That’s real economic empowerment,” he said.
The Reserve Bank of Zimbabwe has pledged to continue incentivising formal remittance inflows. The monetary authorities have previously introduced measures such as zero-rated charges for inbound diaspora remittances and are exploring diaspora housing schemes and investment platforms.
Alongside remittances, the AfDB’s report highlights the immense potential in formalising Africa’s informal business sector, a move that could unlock up to US$125,3 billion in additional annual revenues continent-wide.
“Transitioning from informal to formal activity for Africa’s businesses could generate US$125,3 billion annually in additional revenue,” the AfDB said.
This formalisation drive aligns with Zimbabwe’s efforts to broaden its tax base and stimulate local investment in light of constrained external financing and waning development aid.
AfDB’s report urges African governments to strengthen domestic resource mobilisation through tax reforms, combating illicit financial flows, and enhancing spending transparency.
Economist Ms Alice Chikonzi noted, “Zimbabwe’s informal economy is both a challenge and an opportunity. With over 60 percent of our businesses operating informally, formalisation must be incentivised, not punished. Simplifying business registration, offering tax breaks and linking micro-enterprises to financial services are essential first steps.”
She added that in the face of declining donor aid, the country should look inward and utilise abundant resources.
“The diaspora and our informal sector are not just survival mechanisms, they are strategic pillars for economic self-determination,” said Ms Chikonzi.
“As Zimbabwe consolidates gains in economic stabilisation and embarks on structural reforms, leveraging remittances and formalisation could well be the game-changers that transform transient recovery into sustained growth.
“With coordinated policy action, stakeholder buy-in, and a firm resolve to empower the diaspora and entrepreneurs alike, Zimbabwe may yet turn these financial flows into cornerstones of a modernised, inclusive economy.
Beyond finance, the AEO calls on African nations to bolster food sovereignty through investment in sustainable agricultural systems and agro-processing infrastructure.
The AfDB’s Special Agro-Industrial Processing Zones (SAPZs) are presented as a viable solution to enhance food production resilience amid recurring shocks like climate change and global supply chain disruptions.
“Improving food sovereignty will empower communities to produce their own food in more sustainable and culturally appropriate ways,” the AfDB said.
