Zimbabwe’s central bank, the Reserve Bank of Zimbabwe (RBZ), called on the government on Monday to provide fiscal and non-fiscal incentives to diaspora investments due to their massive contribution to total foreign currency inflows in the country.

Diaspora remittances have become the country’s biggest source of foreign currency, exceeding foreign direct investment, portfolio investment and official development assistance since 2009, according to central bank governor John Mangudya on Monday, following the RBZ Monetary Policy Committee (MPC) meeting on Friday.

The governor added that diaspora remittances contributed 16% to Zimbabwe’s total foreign currency inflows of $9.44 billion as of 31 October 2023.

“Thus the MPC underscored the need to leverage diaspora remittances for development as part of a broader package of measures to cushion the economy from recurring global shocks,” the governor stated.

“The MPC resolved to recommend that the government extends the fiscal and non-fiscal incentives for FDI to diaspora investments in the country, given the primacy of diaspora remittances in the economy,” Mangudya went on to add.

The Reserve Bank of Zimbabwe governor said that taking into account the prevailing macroeconomic environment, the Monetary Policy Committee also said it would keep interest rates at the present levels, including the bank policy rate of 130%, Xinhua news agency reports.

In addition, the Monetary Policy Committee highlighted the need for Zimbabwe’s government to continue hiking the proportion of taxes settled in local currency to boost demand for the local dollar and maintain the exchange rate, the central bank’s governor continued.