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Migrants throw financial lifeline to Zimbabwe
Richard Lapper, FT.com
November 23, 2008

http://www.ft.com/cms/s/0/4ff8626e-b9a3-11dd-99dc-0000779fd18c.html?nclick_check=1

The boxes of cooking oil, soap and bleach and the sacks of white maize flour look too awkward a cargo for the Harare-bound passenger coach that is parked in a rundown corner of downtown Johannesburg, South Africa's commercial hub.

But the driver, Masondo Crispen, is confident the goods can be accommodated. There will be plenty of room too for the envelopes of rand bank notes that Mr Crispen will deliver to Zimbabwean families. To anyone who asks, he is happy to quote commission rates too: R200 ($19, €15, £12) for every R1,000 transported and R100 per box, with discounts depending on quantity.

Mr Crispen is not alone. In the streets surrounding the city's Park railway station it is not hard to find taxi and bus drivers happy to supplement their income by taking money and food into Zimbabwe at the request of migrant workers.

The remittances trade from this corner of South Africa has become a lifeline for Zimbabweans, whose economy is disintegrating amid a catastrophic decline in food production and hyperinflation. Although the drivers' services are expensive - more than four times the rates that migrant workers typically pay in other countries to send money home - Zimbabweans have little option but to pay them.

Sending money electronically is cheaper but the remittance services are hedged with official restrictions (designed to prevent capital flight and money laundering) and can be complicated for migrants who tend to work in the informal economy.

"If I didn't send them back the money, they would starve," says Livingstone Sitole, 35, who scratches a living as a gardener and regularly cycles to Park station to send his earnings home. "If you don't have family outside Zimbabwe, you are in a very bad situation."

Bryson Mudonga, 25, who arrived in Johannesburg in February and makes model elephants, giraffes and ostriches from wire and beads, which he sells to tourists, says: "My family would suffer so much if I didn't send food." Most of the money he makes is spent on provisions and making up a package to despatch home to his wife and eight-year-old son in the town of Masvingo.

Their stories are typical among the estimated 1m Zimbabweans who have fled to South Africa. Although official numbers are unavailable and the size of flows difficult to track, the signs are that the support is becoming more important by the day as Zimbabwe's crisis deepens.

"We have seen a highly significant increase in business from Zimbabweans and I suspect the informal sector is growing pretty fast as well," says Nikki Spottiswood, the Johannesburg-based regional director for Africa at MoneyGram, a remittance company.

Zimbabwe's economic outlook could not be more dire. With Robert Mugabe, president, still refusing to concede control of key ministries to political opponents following disputed elections this year, most foreign economic aid has been suspended. Food aid - offered by the UN's World Food Programme - is increasing but may still not cover shortfalls. The collapse of utilities such as water provision has been highlighted by an outbreak of cholera, from which more than 290 people have died.

Not surprisingly it seems more and more of the remittance money is being spent on food and basics such as soap, torch batteries and bleach, which is used to cleanse water. Themba Ngwenya, a 32-year-old who makes about R3,000 a month as a gardener, still sends remittances regularly to help pay for rent and school fees for his family in Bulawayo. But he also recently started to dispatch an additional package containing rice, maize, soap and salt. "I have started to buy everything for them."

A few years ago Mr Sitole's remittances used to go towards the purchase of a cow or building materials for his family's eight-hectare farm near Mutare. But now all the money is spent on maize flour that his wife converts into a stiff porridge. With seed quality deteriorating and fertilisers hard to find, output at the family farm - which a decade ago produced up to 12 tons of maize a year - has slumped to next to nothing. And local shops are more likely to accept rands or dollars than local currency, rendered practically worthless by an inflation rate that is running at about 100 per cent a day.

Steve Hanke, a Washington-based economics professor, who has studied hyperinflation and is monitoring the country's economy, forecasts that Zimbabwe is on course to break the record for the highest rate - exceeding the 195 per cent a day notched up by the Soviet-backed government of Hungary shortly after the second world war. That looks likely to put further pressure on migrants.

As Sibanengi Dube, of the Johannesburg-based Zimbabwe Refugee Forum, puts it: "The economy is in free fall. Families only really survive if they have a son or a daughter here or abroad."

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