Remittance-scapes: How Diaspora Financial Flows Influence Rural Capital Formation and Development

Abstract

Diaspora remittances constitute a critical source of household income and foreign exchange in Zimbabwe, yet their contribution to gross capital formation in rural areas remains ambiguous. This study systematically reviews 62 empirical and policy studies using a PRISMA-guided approach to examine how remittances interact with rural investment environments. The findings reveal that remittances primarily finance consumption, education, healthcare, and housing, with limited allocation to productive assets or rural enterprises. Housing investment, while significant, provides minimal economic spillovers in the absence of complementary infrastructure and market linkages. Macro-level constraints, including inflation, currency volatility, and policy uncertainty, alongside institutional weaknesses such as insecure land tenure and underdeveloped rural financial systems, restrict the transformation of remittances into sustainable capital accumulation. Spatial analysis further indicates an urban bias in remittance-financed investments, exacerbating rural–urban inequalities. The study applies the remittance-scapes framework to conceptualise the socio-economic and spatial pathways through which remittances flow, highlighting structural impediments to productive investment. Policy implications emphasise macroeconomic stability, rural financial inclusion, land tenure reform, and diaspora-targeted investment instruments to enhance remittance-driven rural development. The study also identifies gaps for future research, including longitudinal analyses, collective investment mechanisms, and the measurement of remittance impacts on specific components of rural gross capital formation.