The diaspora effect to poverty alleviation in Zimbabwe

Abstract

The main objective of this study is to empirically examine the impact of diasporas on poverty alleviation in Zimbabwe from 1980 to 2017. Thus, this research analysis explores the empirical poverty alleviation impact of formal diaspora in Zimbabwe, using per capita GDP and income inequality as control variables. Using the Ordinary Least Squares estimation at first difference and linearized data, the study found no statistical evidence that remittances contribute towards poverty reduction in Zimbabwe over the period under review. However, per capita GDP and income inequality with positive and negative expected signs, were found to have statistically significant coefficients at 1 percent and 10 percent, respectively and accounted for 65 percent of changes in poverty levels in Zimbabwe. The study failed to establish a relationship between remittances and poverty levels in Zimbabwe because it used the data on remittances from the formal channels only while most of the remittances get their way into the economy through informal channels. The study goes on further to recommend measures that improve formal inflows of remittances into the economy such as granting voting franchise to people in the diaspora so that they can participate in the country’s democratic processes as well as putting in place policies that promote the investment of diaspora monies into the financial sector and help enhance financial literacy of both migrants and their households.