Remittances as a Catalyst for Sustainable Domestic Investment and Wealth Creation inZimbabwe: Evidence from a PMG-ARDL Analysis

Abstract

This study examines the relationship between remittance inflows and domestic investment in Zimbabwe over the period 1990– 2025 using annual time-series data. Employing descriptive statistics, unit root tests, cointegration analysis, and the Autoregressive Distributed Lag (ARDL) model, the study investigates both short-run and long-run dynamics. The findings reveal a positive and
statistically significant long-run relationship between remittances and domestic investment, suggesting that remittance inflows
contribute to capital formation in Zimbabwe. However, the short-run effects are weaker and less consistent, indicating delayed
transmission into productive investment. The results imply that while remittances are largely used for consumption in the short
term, they gradually support investment through savings mobilisation and financial intermediation. The study concludes that
enhancing financial inclusion and reducing remittance transfer costs can strengthen the developmental impact of remittances.
Policy recommendations emphasise diaspora engagement and improved financial channels to maximise investment outcomes in
Zimbabwe’s economy for sustainable and inclusive economic growth.