This follows a joint diagnostic mission that identified deep structural issues hindering affordable cross-border payments.
According to the Cross-Border Payments: South Africa–Zimbabwe Corridor Diagnostic Report, released in November 2024, the cost of remitting funds from SA to Zimbabwe averaged 12.7% in early 2024, more than four times the G20 target of 3% by 2030.
Zimbabwe, which relies heavily on remittances that account for nearly 10% of its gross domestic product, received almost half of all remittances sent from SA within the Southern African Development Community (SADC) last year.
The IMF–World Bank mission, conducted in SA’s capital, Pretoria, from August 5 to 13, 2024, found that the corridor’s high costs stem largely from the dominance of United States Dollar cash transactions in Zimbabwe.
Persistent distrust in the local currency has entrenched a cash-based system that drives up costs through expenses related to cash handling, transportation, and security. Cash-related costs make up over 50% of total remittance expenses.
Regulatory barriers and compliance burdens further compound the problem. The report highlights that foreign exchange control rules and immigration-related reporting obligations in SA deter migrants from using formal financial channels.
Many Zimbabweans living in SA, estimated at 1.7 million, remain undocumented and excluded from the formal banking system, relying instead on informal or cash-based methods.
The IMF and World Bank recommend a multi-pronged approach to lower remittance costs, including expanding access to digital payments, improving regulatory harmonisation across the SADC region, and reducing reliance on cash. They also emphasised the need for stronger coordination among central banks, regulators, and private-sector payment operators to promote secure, transparent, and low-cost remittance systems.
The two global institutions, together with the SADC Payment System Subcommittee, have committed to a multi-year technical assistance programme aimed at enhancing cross-border payment efficiency and financial inclusion across the region.
–IMF/ChannelAfrica–
