The Zimbabwean government has announced through President Mnagangawa and his Finance Minister Mthuli Ncube that Zimbabwe will soon be launching a Diaspora Bond. This bond will be some sort of investment document that will be available to those in the diaspora. They can buy this investment document instead of sending money directly to their friends and relatives. The bond allows whatever they send to earn interest of about 9% which can be used to take care of their friends and relatives.

…The first thing is that you can invest through a Diaspora Bond. We are about to issue a Diaspora Bond in he next few months. It took a bit of a while to put it together but it is now ready. You can invest in that bond. It’s a very good yield for a start. I think you should get about 9% in terms of interest. That’s beter than what you get here [in Zimbabwe] from any bank. So that’s a very attractive bond please look out for it.

What you could also do is set up a strucutre where rather than sending money to your parents to your relatives you can take the interest earned and send it to your parents. You only invest once and after that you can look after your parents.

..You can invest in that…it’s a US dollar bond.

Mthuli Ncube speaking to Diasporans about the bond

Everyone wants a piece of those remittances

With Zimbabwe’s economy in full meltdown mode, the entire economy has come to rely on diaspora remittances. There are close to a million Zimbabweans living abroad who constantly and regularly send money to their friends and family in Zimbabwe. Back in 2020 remittances passed the US$1 billion mark and last year they grew to over the US$1.4 billion mark with further growth expected this year. It is a small wonder therefore that everyone wants a piece of the action.

You have everyone setting up some sort of business targeting those in the diaspora. Banks have various packages including bank accounts tailored specifically for those abroad who want to transact in Zimbabwe. They have also partnered with remittance companies in their pursuit of the pie. The government is painfully aware of just how much flows into Zimbabwe via remittances as they are the gatekeepers. They have thus far shied away from taxing this income or doing anything that might push people to resort to informal channels. The Diaspora Bond shows they have decided you can catch more flies with honey rather than resort to their usual forceful approaches. Will this work though?

Trusting a deceitful government

Asking diasporans to invest in government bonds would require diasporans to trust a deceitful government with their money. That will be a tough ask. A lot of those in diaspora were forced to leave Zimbabwe in search of greener pastures. Most would have experienced the government’s financial deceit at one point or another be it during 2008 or years before that or after 2013 when people’s USD balances were forcefully converted to ZWL by Mthuli Ncube.

To have the same person that many people blame for their economic woes asking people to invest in another government project is probably a bridge too far. While the bond sounds good and enticing the government of Zimbabwe habitually lies and cheats members of the public. They did it with bond notes which they claimed were on par with the US dollar and were backed by some mysterious facility at the Afreximbank.

They claimed they wouldn’t make so many bond notes and yet they did. They claimed they would never bring back the Zimbabwean dollar and yet they did soon after. Each time they make a promise you can almost always expect them to break it without a moment’s pause. They are also not ones given to admitting fault. They will always blame someone else for their failures including you, God, drought or sanctions.

In contrast, there are plenty of safer options including bonds from more trustworthy authorities in a lot of the countries that Zimbabwean diasporans are currently resident. South Africa for example has a 10year bond that offers as much as 10% interest which is better on paper than what the government is proposing.

In general, though bonds are a safe form of investment that provides lower returns. Even if you want to invest in Zimbabwe you are better off buying a stand, building a house, renting it out and using the rentals to take care of your parents. In the case of Zimbabwe bonds will be a high risk low return kind of investment.