Zimbabwe: RBZ Unveils Measures to Boost Investment
The Reserve Bank of Zimbabwe (RBZ) yesterday unveiled a raft of interventions to support foreign payments.The Reserve Bank of Zimbabwe (RBZ) yesterday unveiled a raft of interventions, including enhancing nostro stabilisation facilities to support foreign payments, backed by a $1,5 billion kitty to be availed by the Afreximbank, as part of measures to accelerate economic turnaround.
Zimbabwe is tying the loose ends to the $1,5 billion funding facility with the Afreximbank to provide security against potential risk of investment, in a bid to stimulate investor confidence. The funds will also be used to provide hard currency support for key external payments, such as fuel, medicines and raw materials for the manufacturing sector.
RBZ Governor Dr John Mangudya yesterday said it was critical to come up with measures that dovetail with President Mnangagwa's aspirations for a foreign direct investment (FDI) driven economic turnaround. Presenting the 2018 Monetary Policy Statement in Harare, Dr Mangudya said the decision taken by Government to open up the economy was central to sustainable economic transformation.
President Mnangagwa has consistently declared that Zimbabwe is now open for business, a message he carried to the World Economic Forum meeting in Davos, Switzerland recently. Dr Mangudya said on the back of growing impetus from renewed confidence stemming from the new political dispensation, this year would be "defining" for Zimbabwe.
"The Statement (Monetary Policy) comes at a time when the economy is experiencing renewed hope and confidence ushered in by the new economic dispensation, following the formation of a new leaner Cabinet by His Excellency, the President, in November 2017," he said.
"This renewed hope and confidence would need to be supported by going back to basics to restore business confidence and to foster discipline within the national economy. Accordingly, this Monetary Policy Statement seeks to buttress this confidence trajectory by putting in place measures that gradually liberalise the foreign currency market in order to indicate that the country is 'open for business."
Dr Mangudya said Zimbabwe was ready and willing to embrace a paradigm shift to attract investors, both local and foreign, for the total transformation of the economy and to increase production, create jobs, exports, fiscal space, access to capital and foreign finance.
Already, exports have recorded a 36 percent jump from $2,8 billion in 2016 to $3,8 billion in 2017, driven by the export incentive scheme introduced by the RBZ. Dr Mangudya said increasing production was the solution to resolving the country's nearly two decades long economic challenges.
He said that amid depressed economic activity, low exports, current account and fiscal deficits, cash and foreign currency shortages; opening up the economy to business was the most sustainable cure for the major challenges the country has been facing.
Some of the measures spelt out by Dr Mangudya included retaining the multi currency regime, enhancing nostro stabilisation to facilitate foreign payments, providing investment guarantees to protect investor funds, a seven percent tax-free bonus on non-resident transferable funds, and enhanced incentive support for gold, tobacco, cotton and macadamia.
The tobacco and gold support facilities would also be reviewed upwards. Tobacco was previously allocated $28 million, but the fund has been grown to $70 million, while the gold development fund has been pushed up to $150 million from $74 million. The move is aimed at boosting output.
Gold, arguably the most important mineral in the country at the moment, saw deliveries to Fidelity Printers and Refiners (FPR) rising to 24,8 tonnes last year spurred by artisanal miners who contributed 53 percent to deliveries. Dr Mangudya reviewed upwards the foreign currency retention thresholds.
The foreign currency retention threshold for all services and products except gold, diamonds, platinum, chrome and tobacco, remains at 100 percent of export receipts for exporters' use in their operations within an extended period of up to 14 days from the receipt of funds. Read more on