The other solution is to look at how to increase the supply of the United States dollar because that is the money that we are transacting in and we have to look at all sources of financing the United States dollar to come into the country. Let us now go to the next table where I have highlighted a number of sources of the United States dollars – [slide was being shown to the Hon. Members in the National Assembly.]
If we do not export, we perish because we do not get the United States dollar. So it is important to address those bottle necks that is affecting industry, agriculture and mining so that we increase our exports and earn more United States dollars. If you look at that table, in 2009, our exports were 1, 6 billion but look at 2014; 3.6 billion worth of exports – those are United States dollars coming into the country. So the more we export, the more we can earn the United States dollar. So, as a conscious policy matrix, we must increase our export to get the dollar.
The second sources of the United States dollar are international remittances. In 2009, our remittances stood at, that is annual figures, 727 million and these are Diaspora funds coming into the country. By 2015, the remittances had grown from 727 million to 1, 9 billion; it is money coming from all Diasporas. In fact, if we look at Diaspora remittance very well, we might even forget the FDI because we have got about 5 million people in the Diaspora. Some countries are depending on Diaspora remittances to support their GDP. If you look at a country like Eritrea, Ethiopia, the Comoros Islands, in fact in the Comoros Islands, 99% of their GDP comes from Diaspora remittance, from their citizens who are abroad.
However, for this money to be useful, if it comes through Western Union as consumer finance, it will not help the economy. The money has to be structured so that it goes into the capital market, into the infrastructural sector to develop the country. One way of doing it is to introduce infrastructural bonds. You float an infrastructural bond and say Diasporans this is the coupon rate, please subscribe to this coupon rate to roll out infrastructure. In that way, you get a lot of developmental finance coming into the country rather than consumer finance. Even electricity energy bonds, we can use that money to develop our country. The other source are external loans which are not so much that we are getting and then other receipts, then foreign investments and so forth.
Going on to table E –unpacking these remittances, I talked about the Diaspora remittances but international organisations that are also in the country like NGO, Embassies also bring United States dollars to the country as a source of the funds. If you look at the growth rate of the remittances from the Diaspora and remittances from international organisations operating in the country, you can see the pattern that I am talking about.
The sixth recommendation is considering switching to the Rand monetary area. The problem is that if you look at the structure of our exports and imports, we import 60% of our products from South Africa and export about 35% to South Africa. It means it is our key trading partner, make no mistake. Therefore, it would be easy if we were going to transact in the Rand as a legal tender but it means playing by the rules of the Rand Monetary Union which includes Lesotho, Swaziland, Namibia and other countries who are using the Rand.
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