Dictate and transcribe from an audio file

Something like Soundflower may be able to route the audio, but you still need something to do the transcription. Unfortunately, dictation on the Mac is not very good. I suggest playing the audio from the Mac and having your phone do the dictation. It will be much more accurate and easy-to-use than the Mac will be.

If you need speech-to-text and need some accuracy, you'll probably be using a speech-to-text transcription service, either a traditional transcription service or an automated translation service, and there are various other services. There are options that you can try.

Wouldn't be surprised to see Android apps available that upload the audio to Google or to another service, too.

iMac 5K can be upgraded to and is supported with macOS High Sierra (10.13) and Mojave (10.14), if you want to try using the built-in speech-to-text. That's newer software than what you have, if you're still running Sierra. Not that I'd expect a large improvement in the automated transcription. But what's available in macOS might work for your needs.

Sorry. I can’t help with that. All I can do is suggest that you avoid the build-in dictation in macOS. All it will do is frustrate you.