Re­prieve for Zim share­hold­ers

The Star Early Edition - - NEWS - Tawanda Karombo

FOR­EIGN share­hold­ers in Zim­bab­wean com­pa­nies may just have re­ceived a re­prieve in repa­tri­at­ing earn­ings af­ter Re­serve Bank of Zim­babwe chief John Man­gudya yes­ter­day said that the apex bank has set up a fund fa­cil­ity to help ease pay­ments to in­ter­na­tional in­vestors.

Man­gudya said in his midterm mon­e­tary pol­icy re­view that the bank was set­ting up a Zim Port­fo­lio In­vest­ment Fund to fa­cil­i­tate the repa­tri­a­tion of for­eign in­vestors’ funds due to the on­go­ing for­eign cur­rency short­ages in the coun­try.

“The mul­ti­c­ur­rency sys­tem is here to stay up un­til the fun­da­men­tals of our own cur­rency have been achieved. Th­ese in­clude one-year im­port cover, a sus­tain­able gov­ern­ment bud­get… demon­stra­tion that con­sumer and business con­fi­dence is right,” Man­gudya said.

For­eign-owned com­pa­nies such as AB In­Bev, Delta Cor­po­ra­tion and BAT Zim­babwe have said that they were hold­ing onto large sums of for­eign share­hold­ers’ funds due to for­eign cur­rency and liq­uid­ity prob­lems in the coun­try.

Econet Wire­less also had to carry out an off­shore rights issue to set­tle ma­tur­ing in­ter­na­tional debts.

Fund man­agers claim that for­eign in­vestors started to move from mon­e­tary assets as they sought shel­ter from the pro­longed liq­uid­ity cri­sis.

The Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) said for­eign cur­rency short­ages were sti­fling lo­cal com­pa­nies.

The group, which rep­re­sents all large in­dus­try and man­u­fac­tur­ing com­pa­nies, has also sug­gested that Zim­babwe adopt the rand as most com­pa­nies rely on South Africa for raw ma­te­ri­als and ex­port mar­kets.

“There is a need to in­crease ex­ports (to gen­er­ate for­eign cur­rency for the econ­omy), but this will not hap­pen overnight. The cur­rent sit­u­a­tion (of forex short­ages) is threat­en­ing to re­verse pol­icy gains,” CZI said.

Con­cern

De­spite wide­spread con­cern, Zim­babwe has in­sisted that it will not re­vert to its Zim­dol­lar cur­rency, which it ditched in 2009 af­ter record hy­per-in­fla­tion that re­sulted in empty shop shelves and com­pany clo­sures.

Man­gudya said the cen­tral bank had been granted as much as $600 mil­lion (R7.9 bil­lion) in a new fa­cil­ity to help sta­bilise Nostro ac­counts – in­ter­na­tional ac­counts held by lo­cal banks to re­ceive and pay in­ter­na­tional trans­ac­tions on be­half of com­pa­nies and in­di­vid­u­als such as ex­porters – by Afreximbank.

He said the bank had is­sued $175m in bond notes and $25m in coins to breathe liq­uid­ity into the econ­omy, but com­pa­nies have had to re­sort to par­al­lel mar­kets to pur­chase for­eign cur­rency to pay for im­ports of raw ma­te­ri­als.

Only about six banks in Zim­babwe, the cen­tral bank said, have ex­port­ing clients among their clients.

The in­tro­duc­tion of bond notes and coins, said to be of­fi­cially backed by a $200m fa­cil­ity from Afreximbank, has failed to ad­dress the cash chal­lenges Zim­babwe is fac­ing.

Man­gudya said the cen­tral bank would print more bond notes to bring the to­tal to $300m as it had re­ceived a “new fa­cil­ity” from Afreximbank.

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