Reprieve for Zim shareholders

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.