MODULE CODE: SOC 413

FACULTY OF SOCIAL SCIENCES

MODULE: Migration

GROUP ASSIGNMENT: 1

REG No SURNAME NAME LEVEL

R19193291f MATARISE JUDITH 4.1
R1913221N MUSINDO TINASHE 4.1
R1910386P ZINYONI TONGAI. L 4.1
R199322C NYONI THUBELIHLE 4.1
R197148J MUSONZA TANYARADZWA 4.1
R1913855N KATOMA NIGEL 4.1
R1910678V CHAPETA VIMBAI 4.1
R1914204X SHUMBA TAFADZWA. N 4.1
R1915003R MATHUTHU BRIAN N 4.1
R1912767N SUMBURETA INNOCENT. T 4.1
Discuss the strategies that the Zimbabwean Government can adopt in order to increase
migrant remittances and promote economic growth of the country?

There are quite a number of strategies that the Zimbabwean Government can adopt in order to
increase migrant remittances and promote economic growth of the country. The essay seeks to
highlight and indicate the various strategies that can be put in place to promote economic growth
of the country through an increase in migrant remittances. Remittances can be referred to as the
money migrants send home to family and friends, provide the most tangible and perhaps the least
controversial link between migration and development. Strategies that are going to be explored
to increase migrant remittances and promote economic growth in the country include, lowering
taxes, creation of a conducive investment environment, political stability, strengthening of the
formal financial infrastructure, Economic stability, improvement access to financial services,
introduction of incentives to attract diaspora investments, lowering of import duties, better access
to reach countries labor market among others which are going to be examined as the essay
commences.

Remittances are an important source of funding for countries with large emigration rates, and a
key source of income for many households from developing countries. Migrant remittances
provide an economic lifeline to many countries. Remittances are the largest source of foreign
exchange in many countries, especially poor or conflict-affected countries, providing critical
support to their balance of payments. Large remittance inflows can lead to currency appreciation
that can be addressed by improving the business environment. Creation of economic stability
plays a vital role in increasing migrant remittances and promoting economic growth of the
country. Economic stability ensures foreign direct investments. According to Morrison (1998)
remittances to Kerala for example, a leading remittance-receiving state in India, have helped in
improving the welfare of the migrants’ households and raised levels of economic activity in
construction, trade, transport and personal services, however their contribution to the state’s
economic growth in terms of agriculture and industry has been extremely limited.

More so, the frequency of remittance receipts appears to be linked to the availability of financial
service providers, therefore improvement in access to financial services plays a critical role in
increasing migrant remittances and promoting economic growth. Remittances are an important
source of funding for countries with large emigration rates, and a key source of income for many
households from developing countries. Ratha et al (2016). The volume of remittances to low and
middle-income countries is estimated to have reached USD 432 billion in 2015, more than three
times their amounts of official development assistance. Maximizing the positive effects of these
remittances is therefore crucial for alleviating poverty and promoting sustainable development in
migrant-sending communities and countries. Remittances can contribute to financing
development and improving the lives of millions of households in developing economies.

In addition to that, Studies show that households especially those with limited resources tend to
use these funds primarily for basic consumption which is quite detrimental to poverty alleviation.
However, a favorable policy environment can increase returns to investments and expand
investment options for remittance-receiving households. Introduction of incentives plays a
significant role in the attraction of diaspora investments. Introduction of Governmental
incentives plays an instrumental role in the migrant remittances as incentives acts as motivation
for migrants to plough back into their home countries and communities. During the period of
2016 – 2017 The Zimbabwean Government made quite a number of strides through the
introduction of incentives, policy formulations which motivated migrants to send remittances
back into their countries. The investment and financial environment have played a significant
role in the way remittances are used Adams (2010).

Furthermore, they are various strategies that the Zimbabwean Government can adopt in order to
increase migrant remittances and promote economic growth of the country among which
includes, lowering of import duties. Import duties have greatly limited and hindered economic
production. Over the years, the Zimbabwean Government has engaged in a new economic
trajectory, this has resulted in new policy formulations in order to cater for migrant remittances
however to no avail. As a result of the past failures the Government has engaged in a new
framework which involves lowering of import duties. Presently the Zimbabwean Government
has scrapped import duties for some of its civil servants which have seen migrants’ remittances
increasing thereby alleviating poverty in communities. Remittances are often invested in ways
that contribute to development; the full potential of remittances is not being entirely realized
Massey and Parrado (1998).
More so, they are greater need to create favorable infrastructure and institutions that
accommodate and cater for migrant remittances that the Zimbabwean Government can adopt in
order to increase migrant remittances and promote economic growth of the country. According to
Galetto (2011) Unfavorable infrastructure and institutions may hinder productive remittance
investments. Poor education and financial infrastructure, such as a lack of schools and financial
service providers, can hold back remittance investments. On the other hand, well-functioning
credit and land markets, and an encouraging investment climate, can help remittances to be
channeled productively. Galetto (2011) is of the view that, in remote rural areas, difficulties
accessing markets may also deter households from investing in. for example more lucrative
commercial crops.

Furthermore, the global annual growth rate of remittances has slowed considerably in recent
years. The slowdown is mainly explained by harsh economic conditions in major remittance-
source countries and the depreciation of several important currencies. The fact that many banks
are closing down their money transfer operator accounts in response to anti-money laundering
measures, a practice referred to as de-risking, is another factor that contributed to the slowdown
in remittance flows Ratha et al (2016). In some countries for example GDP was starting to take
its course. In order to address the limited access to remittances it is important for Government to
revisit the drawing board and implement policies that are friendly to the remittances sending eco
– systems.

There are two possible ways and they are by no means mutually exclusive in which Zimbabwe
can secure increased inflows of remittances. Costs of transfer and exchange rates remaining the
same one is by encouraging an increase in the average amount of remittance per migrant and the
other is through the access of an increased number of their migrants to labor markets abroad. The
level of remittances per migrant is influenced by a litany of different factors. However, assuming
that on average the proportion of earnings remitted home does not decline, it is clear that an
increase in the number of migrants will lead to an increase in the total amount of remittances
from the migrant-receiving countries and a corresponding increase in inflows to home countries.
Spatafora, (2005) suggested that for a panel of 22 developed countries during the period 1991-
2000 the IMF found that a two-percentage point increase in the number of foreign workers as a
share of the population was associated with a 0.25 percentage point increase in remittance
outflows as a share of GDP. Likewise, Swamy (1981) reports a strong relationship between
remittance inflows and the number of emigrants for Greece, Turkey and the former Yugoslavia.
Some estimates have been made of the additional amount that developing countries can gain
because of a limited relaxation of the rich countries’ policies on labor immigration.

The remittance receipts in this case would be substantial, given that, in addition to the regular or
periodic remittances during their stay abroad, returning migrants are likely to bring back all or a
good part of any savings and investment they may have made in the erstwhile host country. The
gains from wider access of developing country emigrants to the labour markets of the industrial
countries are of course not one-sided, limited to the sending countries alone. A more efficient
allocation of labour would generate gains to the world economy from which in principle all
countries should benefit. Any such liberalization of immigration will of course have other
economic and social consequences, positive as well as negative, for both host and home
countries, the discussion of which is beyond the scope of this study.

However it is important to note that when migrants have a legal status in the host country, they
normally earn more and have better access to opportunities for upgrading their skills and
earnings. Relative to irregular migrants, and other things remaining equal, they are therefore
likely to send more funds back home and the flows can also be expected to be more predictable.
It is also likely that irregular migrants use informal, unrecorded channels more frequently. Lucas
(1987) says, from the perspective of policy formulation, this makes a strong case for removing
barriers to immigration that allows for legal entry of immigrants, especially into countries where
unmet labour demand is causing pressure for irregular immigration. It is well known that
developing country migrants, especially those who are less skilled, are generally paid at lower
rates than domestic workers of comparable skills in rich countries. Even so, since, compared to
developing countries, earnings in more affluent countries are much higher, migrants working in
these countries can be expected to earn more and send on average a much higher amount of
remittances than those working in less affluent countries, other things remaining the same.

Creating an enabling environment to enhance the development impact of remittances.

Remittances are an important source of funding for countries with large emigration rates, and a
key source of income for many households from developing countries. The volume of
remittances to low and middle-income. Ratha et al (2016). Maximizing the positive effects of
these remittances is therefore crucial for alleviating poverty and promoting sustainable
development in migrant-sending communities and countries. Nevertheless, what factors drive the
sending and spending of remittances, and how can policies enhance remittance led development?
Studies show that households, especially those with limited resources tend to use these funds
primarily for basic consumption Adams (2010). It is also important to keep in mind that
remittances constitute private household income and it is up to the household to decide how
these funds are best used. However, a favorable policy environment can increase returns to
investments and expand investment options for remittance-receiving households. Discussions on
linking remittances to development and development finance have so far mainly focused on
policies that directly affect migration and remittance behavior. However, the link between
remittances and development is influenced by a multiplicity of factors; various other public
policies can have an indirect impact on remittance behavior but so far have only received limited
attention. Remittance-led development, explores how policies, directly and indirectly, can spur
development by enhancing investments stemming from remittances and its importance for
development at both local and national levels.

Introduction of public policies to enhance remittance driven investments. Remittances can be

linked to investment in areas with development potential such as agriculture, businesses and
schooling, but that many factors shape the relationship between remittances and investment.
Although remittances are private sources of funding, and policy makers cannot decide how
individuals and households spend their money, public policy can play an important role in
creating an enabling environment for optimizing the volume and the use of remittances. Policies
can make it easier to send and receive remittances, and can guide productive remittance
investment. While policy makers and researchers have focused significant attention on migration
and development policies when targeting how remittances are sent and used, more general
sectoral policies can influence remittance behavior indirectly by affecting individual and
household characteristics as well as institutions and infrastructure.

However, these linkages have received much less attention. First, the development impact of
remittances is influenced by the characteristics or pattern of the remittances themselves. For
example, the amount and frequency of remittances play a role in investments. Productive
investments for example business start-ups or switching from subsistence to commercial
farming, often require relatively large funds. Massey and Parrado, (1998) argue that the amount
of remittances received is important for investment decisions. Remittances that are sent home
regularly are more likely to spur investment, as the households may be more likely to overcome
risks involved in long-term investments if the remittance income is stable. When remittances are
sent through formal channels, they can also more easily be used as collateral. Individual and
household characteristics such as location and gender composition indirectly influence
remittance-led development through an impact on remittance pattern and use. Many emigrant
households live in rural areas with less developed financial infrastructure. In remote rural areas,
difficulties accessing markets may also deter households from investing in for example more
lucrative commercial crops Galetto, (2011).

Other characteristics affecting remittance use include household wealth, the gender of the
household head and the vulnerability of the household to shocks. Poor households that are
vulnerable to negative shocks may use remittances as insurance, as pointed out by Yang and
Choi, (2007) and not be able to invest in more productive assets. Poorer households often also
find it harder to access credit. Finally, unfavorable infrastructure and institutions may hinder
productive remittance investments Galetto, (2011). Poor education and financial infrastructure,
such as a lack of schools and financial service providers, can hold back remittance investments.
On the other hand, well-functioning credit and land markets, and an encouraging investment
climate, can help remittances to be channeled productively.

In conclusion economic growth in Zimbabwe can be boosted in a number of ways through

migrant remittances as migrants through family ties and through indigenous economic interest
would return money and capital to invest in Zimbabwe. Economic growth can be promoted by
easing government policies on customs when migrants want to bring goods and money back
home. It has also been stated that Zimbabwean economy growth can be enforced through
creation of more Zimbabwean transactional services for ease and interest gain. However some of
the means to insure economic growth through migrant remittances are lukewarm as they put
economic strain on Zimbabwe and problems on the migrants part, who want to return earned
money home.
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Galetto, V. (2011), “Migration and productive investments: A conceptual framework”, in

Diaspora for Development in Africa, World Bank, Washington, DC. Online at
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Lucas, R.E.B. (1987) “Emigration to South African mines“, American Economic Review, 77(3):
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International Migration Regimes and Economic Development (2005). Online at

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Massey, D.S. and E.A. Parrado (1998) “International migration and business formation in
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development finance”, In Global Development Finance, Washington, D.C., World Bank, pp.157-
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Spatafora, N. (2005) “Worker remittances and economic development”, World Economic

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Swamy, G. (1981) “International migrant workers’ remittances: Issues and prospects”, World
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Yang, D. and H. Choi (2007), Are remittances insurance? Evidence from rainfall shocks in the
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