An economist has said the government’s proposed diaspora bond for Zimbabweans overseas looks attractive on paper saying the only challenge would be that members of the public have no trust in the formal financial sector.
A diaspora bond is described by the Migration Policy Institute as a government debt security with investors drawn from the country’s nationals living abroad, their descendants, or those with other connections to the nation.
Speaking at a side meeting with investors at the United Nations General Assembly 77th session in New York, Finance and Economic Development minister Mthuli Ncube said:
We want investment back home. How shall we do it? The first thing is that you can invest through a diaspora bond which we are going to issue in the next few months. We took a while putting it together and it’s now ready. You can invest through that bond. It’s very good very attractive.
We are also going to set up a structure where rather than sending money every month to your relatives, we can take the interest and pass it on to your parents. You invest once, after that you can look after your parents through interest. Investment is very safe in Zimbabwe.
Meanwhile, economic analyst Victor Bhoroma said the initiative looked attractive on paper, but government policies needed to be consistent. NewsDay Zimbabwe cites him as saying:
This looks attractive on paper, but remember the diasporas have reservations with the formal banking system which lacks market confidence. So, there are a number of things that need to be ironed out for such to work.
Boroma added that the repayment of that bond needs to be in foreign currency and there is a need for a ring-fenced account to ensure that those who buy that bond can be compensated.