Online Reporter
Michael Tome, Business Reporter
ZIMBABWE has huge potential to maintain the prevailing strength and stability of its local currency, anchored by the sustained increased growth in foreign currency earnings from key export minerals and diaspora remittances, CBZ Holdings group chief executive officer (CEO), Mr Lawrence Nyazema, has said.
Mr Nyazema said this on Monday during a presentation to Zimbabwean investors in the United Kingdom (UK), titled Zimbabwe Macroeconomic Overview: Economic Opportunities for Zim Diaspora in the United Kingdom.
The UK is now Zimbabwe’s largest source of inbound remittances, which totalled US$909 million in the five months to May 2025, from US$842 million in the same period in 2024, accounting for 28,4 percent of total diaspora inflows, slightly ahead of South Africa at 27,6 percent.
Mr Nyazema said CBZ Holdings could offer a variety of financial solutions to support Zimbabweans in the diaspora, including but not limited to mortgage finance, real estate investment trusts, property management and diaspora bonds.
His remarks come after Zimbabwe witnessed a marked increase in foreign currency receipts in 2024, which surged by 21 percent to a record US$13,3 billion.
Export proceeds were the dominant source of foreign currency, accounting for 59,2 percent of the country’s total foreign exchange receipts during the year.
International remittances, comprising diaspora remittances and non-governmental organisation (NGO) inflows, contributed the second biggest amount at 25,1 percent of the total foreign currency receipts.
Zimbabwe’s foreign currency receipts grew by 22,5 percent to US$6 billion in the first five months to May, from US$4,9 billion in the same period in 2024 as a result of improved global prices of key export minerals, including gold and platinum, and the strong growth in diaspora remittances.
The country’s strong external sector performance has provided a much-needed boost to the country’s economy.
Zimbabwe’s US$1,2 billion average monthly forex receipts, in the first five months of this year, have resulted in a healthy monthly surplus averaging US$378 million, which has been instrumental in facilitating domestic transactions and bolstering the country’s foreign currency reserves.
This augurs well for the country’s efforts to anchor the stability of ZiG, the country’s new currency anchored by precious metals and foreign currency reserves, which was introduced in April last year to replace the inflation-battered Zimbabwe dollar.
The stability of the local currency against the US dollar has been a key outcome of the strong foreign currency inflows. The ZiG/US dollar parallel market premium has thus narrowed from 100 percent in September 2024 to 28 percent to date.
Mr Nyazema said Zimbabwe did not have a foreign currency problem because it was now generating more from exports and diaspora remittances, and improved foreign currency earnings should continue to back the local currency.
He said the forex reserves were essential for stabilising the domestic currency, ZiG, meeting future external obligations, and enhancing the country’s overall economic resilience.
“This time last year, we had a quarter of a billion in foreign currency reserves, that is, gold and US dollars.
Fast forward to today, we are now three-quarters of a billion. But my challenge to the central bank and all of us is to say, let us save at least a billion a year.
So that by the time we get to 2030, we have six months’ import cover.
“If we are getting US$13 billion and we spend about a billion, the currency issue should be an easy one.
What we need to do is to make sure that our economic environment has low inflation,” said Mr Nyazema.
Zimbabwe has maintained monthly inflation below one percent since February, with the June rate coming at minus 0,1 percent. Similarly, the US dollar rate, given Zimbabwe’s multi-currency environment, was measured at minus 0,2 for the same month.
The low monthly inflation trend is expected to persist until the end of the year and close below three percent in line with central bank targets amid tight monetary and fiscal policies.
Mr Nyazema also noted that the country’s exponential growth in foreign currency earnings, coupled with the prevailing low levels of inflation, was critical for dealing with domestic currency issues.
“What has killed us in the past is high levels of inflation. I am happy when I look at the month-on-month inflation that is fairly low at around one percent, if not less.
“Therefore, if you have a low inflation environment and six months’ import cover, you can defend your currency,” said Mr Nyazema.
Economist Mr Godfrey Kanyenze said the rise in foreign-currency inflows to US$6 billion over the first five months of 2025 was extremely important for Zimbabwe’s economic health.
“These additional dollars help to rebuild our net international reserves, which in turn support confidence in domestic ZiG currency.
Stronger mineral-export earnings reduce the Government’s reliance on volatile portfolio and concessional financing, giving the Reserve Bank greater scope to defend the local unit and manage liquidity.
“At the same time, higher remittances bolster household consumption and small-business activity, especially in rural and peri-urban areas where formal banking channels are thin.
Together, these inflows enhance macro-stability by containing inflationary pressures and strengthening livelihoods at the community level, underpinning both demand and trade activity across the country,” said Mr Kanyenze.
These developments come as the central bank maintained a tight monetary policy stance in response to evolving developments and emerging risks to global growth prospects to maintain stability in the economy, during the second quarter.
Additionally, the bank continued to modernise its monetary policy framework by progressively transitioning to indirect instruments for open market operations (OMO), aiming to enhance the effectiveness of its policy interventions.
derick.khumalo