Governance, Financial Inclusion and Foreign Remittances in Zimbabwe: A VECM Approach
Keywords:
Financial Inclusion; Foreign Remittances; Diaspora Remittances; ZimbabweAbstract
This study examines the impact of governance and financial inclusion on remittances in
Zimbabwe using time series data collected from the World Bank database for the period 2009
to 2021. A vector error correction model was conducted using Stata/SE 14.2 to analyse the
short- and long-run relationships between the variables. The results demonstrate the existence
of cointegration in the model. The Johansen normalization long-run output showed a negative
impact of governance on remittances, as well as a positive impact of financial inclusion on
remittances. Both coefficients are statistically significant at the 1% level. Furthermore, the
results show that governance and financial inclusion in Zimbabwe have asymmetric effects
on remittances in the long run, on average, ceteris paribus. This study is important in policy
formulation and implementation. The government should create a conducive environment for
remittances through improved governance and financial inclusion policies.
References
Ajefu, J. B., and Ogebe, J. O. (2019). “Migrant remittances and financial inclusion among
households in Nigeria,” Oxford Development Studies, Vol. 47(3), pp. 319-335.
Ambrosius, C. and Cuecuecha, A. (2016). “Remittances and the use of formal and informal
financial services,” The World Development, Vol. 77©, pp. 80-98.
Anzoategui, D., Demirgüç-Kunt, A., and Martínez Pería, M. (2014). “Remittances and
Financial Inclusion: Evidence from El Salvador,” World Development, Vol. 54, pp.
-349.
Arthur, E.K., Musau, M. S. and Wanjohi, M. F. (2020). “Diaspora Remittances and Financial
Inclusion in Kenya,” European Journal of Business Management and Research, Vol.
(2), pp. 1-10. DOI: 10.24018/ejbmr.2020.5.2.289.
Bangake, C., and Eggoh, J. (2020). “Les transferts des migrants améliorent-ils l’inclusion
financière dans les pays récipiendaires?,” Region et Developpement, Vol. 51, pp. 115-
Bracking, S. and Sachikonye, L. (2010). “Migrant remittances and household wellbeing in
urban Zimbabwe,” International Migration, Vol. 48(5), pp. 203-227.
Brown, R. P., Carmignani, F., and Fayad, G. (2013). “Migrants remittances and Financial
development: Macro-and micro-level evidence of a perverse relationship,” The World
Economy, Vol. 36(5), pp. 636-660.
Calderon, C., P. Fajnzylber, and J. H. Lopez. (2008). Remittances and Growth: The Role of
Complementary Policies. In Remittances and Development: Lessons from Latin
America, edited by P. Fajnzylber and J. H. Lopez. Washington, DC: World Bank.
Chuc, A. T., Li, W., Phi, N. T. M., Le, Q. T., Yoshino, N., and Taghizadeh-Hesary, F. (2021).
“The necessity of financial inclusion for enhancing the economic impacts of
remittances,” Borsa Istanbul Review.
Common Market for East and Southern Africa [COMESA] (2019). Diaspora communities
critical to post covid-19 recovery. Available at: https://www.comesa.int/wp-
content/uploads/2020/06/Diaspora-Remittances-Critical-for-Covid-19-Recovery.pdf.
[Accessed 10 October 2023].
Demirgüç-Kunt, A., Córdova, E. L., Pería, M. S. M., and Woodruff, C. (2011). “Remittances
and banking sector breadth and depth: Evidence from Mexico,” Journal of
Development Economics, Vol. 95(2), pp. 229-241.
Gautam, D. P. (2019). “Do Remittances Promote Financial Inclusion?,” In Economic and
Political Institutions and Development, pp. 91-108).
Inoue, T., and Homori, S. (2016). “Do Workers' Remittances Promote Access to Finance?
Evidence from Asia-Pacific Developing Countries,” Emerging Markets Finance and
Trade, Vol. 52, pp. 765-774.
International Organisation for Migration [IOM] (2016). IOM Zimbabwe annual report.
Available at:
https://www.iom.int/sites/g/files/tmzbdl486/files/country/docs/zimbabwe/IOM-
Zimbabwe-AR-25Aug2016.pdf. [Accessed 10 October 2023].
Kaufmann, D., Kraay, A. and Mastruzzi, M. (2010). "The Worldwide Governance
Indicators: Methodology and Analytical Issues". World Bank Policy Research
Working Paper No. 5430.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1682130.
Machasio, I. (2018). Do remittance flows promote financial inclusion? (No. 26-2018).
MAGKS Joint Discussion Paper Series in Economics.
Maune, A. and Matanda, E. (2022). “The impact of Foreign Remittances on Economic
Growth: Evidence from Zimbabwe,” Acta Universitatis Danubius. OEconomica, Vol.
(4).
Maune, A., Matanda, E. and Mundonde, J. (2020). “Does Financial Inclusion cause
Economic Growth in Zimbabwe? An Empirical Investigation,” Acta Universitatis
Danubius. OEconomica, Vol. 16(1), pp. 195-215.
Maune, A., Matanda, E., and Chitombo, E. (2023). “Governance, Gross Capital Formation,
Foreign Remittances and Economic Growth in Zimbabwe,” Acta Universitatis
Danubius. OEconomica, Vol. 19(3), pp. 107-117.
Mbilla, S. A. E., Ayimpoya, R. N. and Amoah, D. A. (2018). “Remittances and Financial
Inclusion in Ghana,” International Journal of Business, Economics and Law, Vol.
(5), pp. 39-51.
Misati, R. and Kamau, A. (2018). “Do Migrant Remittances Matter for Financial
Development In Kenya?” The Kenya Bankers Association (KBA) Working Papers,
No. 30, WPS/08/18, 2018.
Mugumisi, N. (2014). “Microeconomic determinants of migrant remittances into Zimbabwe:
A survey of Zimbabweans in Botswana and South Africa,” International Journal of
Economics, Commerce and Management, United Kingdom, Vol. 2(9).
Munyegera, G. K., and Matsumoto, T. (2016). “Mobile money, remittances, and household
welfare: Panel evidence from rural Uganda,” World Development, Vol. 79, pp. 127-
Naceur, S. B., Chami, R. and Trabelsi, M. (2020). ‘Do Remittances Enhance Financial
Inclusion in LMICs and in Fragile States?” IMF Working Paper, WP/20/66, Institute
for Capacity Development, Washington DC. USA.
Nyamongo, E. M., Misati, R. N., Kipyegon, L., and Ndirangu, L. (2012). “Remittances,
financial development and economic growth in Africa,” Journal of economics and
business, Vol. 64(3), pp. 240-260.
Omon, I. J. (2021). “Determinants of migrants’ remittances in the West Africa Monetary
Zones (WAMZ),” Journal of Research in Humanities and Social Science, Vol. 9(1),
pp.87-95.
Orozco, M., and Fedewa, R. (2006). Leveraging efforts on remittances and financial
intermediation (Working Paper ITD= Documento de Trabajo ITD; n. 24) (Vol. 24).
BID-INTAL.
Qamruzzaman, M. (2023). “Does Environmental Degradation-Led Remittances Flow? Nexus
between Environmental Degradation, Uncertainty, Financial Inclusion and
Remittances Inflows in India and China,” International Journal of Energy Economics
and Policy, Vol. 13(2), pp. 1-19.
Reserve Bank of Zimbabwe [RBZ] (2023). Monetary Policy Statement. Available at:
https://www.rbz.co.zw/index.php/monetary-policy/monetary-policy-statements/604-
february-2021-monetary-policy-
statement#:~:text=Improved%20production%20and%20productivity%20will,as%20e
nvisaged%20in%20the%20NDS1. [Accessed 10 October 2023].
Reserve Bank of Zimbabwe) [RBZ] (2021). Monetary Policy Statement. Available at:
https://www.rbz.co.zw/index.php/monetary-policy/monetary-policy-statements/604-
february-2021-monetary-policy-
statement#:~:text=Improved%20production%20and%20productivity%20will,as%20e
nvisaged%20in%20the%20NDS1. [Accessed 10 October 2023].
Uchenna, E., Evans, O. S., and Stephen, O. (2015). “One dollar, one bank account:
remittance and bank breadth in Nigeria,” Journal of International Migration and
Integration, Vol. 16(3), pp. 761-781.
United Nations [UN] (2021). The United Nations Common Country Analysis Zimbabwe
Available at: https://zimbabwe.un.org/en/130569-zimbabwe-un-common-
country-analysis-2021. [Accessed 20 October 2022].
United Nations [UN] (2023). International day of family remittances. Available at:
https://www.un.org/en/observances/remittances-day/SDGs. [Accessed 10 October
.
United Nations Economic Commission for Africa [UNECA] (2023). Fostering recovery and
transformation in Africa to reduce inequalities and vulnerabilities. Available at:
https://www.uneca.org/eca-events/stories/fostering-recovery-and-transformation-
africa-reduce-inequalities-and-vulnerabilities. [Accessed 10 October 2023].
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Alexander Maune, Justice Mundonde
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
