THE Reserve Bank of Zimbabwe (RBZ)’s “Homelink” facility launched earlier this year to mop up foreign currency in the diaspora is fast losing favour with Zimbabweans scattered around the worl
d, analysts and money transfer agency officials have said.
The initiative is being shunned because of the unattractive rates offered on the central bank’s auction floors. Zimbabweans in the diaspora have since turned to private individuals who are facilitating their foreign currency transactions at parallel market rates.
The British pound and the United States dollar have remained largely stagnant on the RBZ’s controlled auction market. This has seen the parallel market rate rally on the back of perennial shortages.
A money transfer agency operator with a branch in London who recently visited the country said all was not well in the Homelink plan. He said on average the London branch receives 30 enquiries a day from Zimbabweans in the diaspora but only one transaction is finally processed.
“There is now an even stronger parallel market network between people in London and Zimbabwe,” said the official last week.
He said there was rampant black market activity abroad, which is now undermining the Homelink initiative.
“A number of MTAs in the United Kingdom are reported to have closed shop owing to the serious black market activities which have sidelined their business because of the low exchange rates being offered,” he said.
He said of major concern to citizens scattered throughout the diaspora was the huge gap between the parallel and auction rate.
The Zimbabwe dollar is currently trading at $5 611: US$1, which contrasts with the parallel market rate of $7 400: US$1.
Analysts say this gap is likely to continue widening unless the central bank devalues the dollar to match the parallel market rate.
Government is, however, unwilling to do this saying it could result in escalating bills for electricity supplies from neighbouring countries.
“It’s a network of people in London who have contacts with people in Zimbabwe who have foreign accounts,” the MTA official said. “Zimbabweans deposit the foreign currency into the FCA and the recipient is paid in Zimdollars but at the parallel market rate.”
Analysts blame the policy framework for Homelink’s problems.
Economic advisor to the Movement for Democratic Change (MDC) Eddie Cross said Homelink was operating in an unstable economy.
“The gap between the Homelink rate and the parallel market is too big to ignore. That is why it has failed to achieve the desired results,” Cross said. “The framework is not conducive. Government needs to look into other ways to boost the export sector.”
It is estimated that Zimbabweans abroad have the capacity to send more that US$70 million a month.
This has, however, not been achieved owing to the stagnant rate on the market and also resistance from citizens in the diaspora.