Zimre’s removal from sanctions boon for group
FINANCIAL services group, ZimRe Holdings Limited has been removed from US Department of the Treasury’s Off ice of Foreign Assets Control (OFAC) sanctions list in a development expected to make the company attractive to foreign investors.
OFAC took action after ZimRe submitted a petition for removal in late 2016.
ZimRe had been on sanctions since July 25 2008 following the signing of an executive order by the then US President George Bush that expanded the sanctions list to include companies registered in Zimbabwe perceived to be owned or controlled by the Government of Zimbabwe.
But last Thursday OFAC revoked the listing of the ZimRe as a Foreign Designated National and deleted ZimRe from the OFAC list of Specially Designated Nationals.
ZimRe chief executive officer Stanley Kudenga said the development opens new horizons for the group.
“One key area of focus that we will now be able to work on is our SADC regional presence and growth strategy.
“Our regional operations were being seriously constrained by the OFAC sanctions,” said Mr Kudenga.
“At one stage there were thoughts of listing the regional operations on Botswana Stock Exchange and this was suspended mainly because of OFAC.
“Now we have all the f lexibility we need to roll out our regional growth and expansion strategy and create a strong reinsurance group in the Sadc.
“We have the backup of strong skills base, an established network and strong goodwill to be dominant in the markets we operate without the limiting factor of OFAC sanctions.
“We are going to become an international player of repute,” he added.
Mr Kudenga said the group can now raise international capital at competitive pricing for expansion and ensure strong growth in shareholder value.
“ZimRe appreciates OFAC’s quick action and deletion of ZimRe from OFAC’s list of Specially Designated Nationals.
“This is a positive start to 2017 and ZimRe looks forward to continuing to grow its business in 2017 and beyond,” Said Mr Kudenga.
“This is a very significant milestone for the ZimRe which heralds a new chapter for the expansive and diversified investment Group.
“It means we have to re-strategise from a number of perspectives in view of this key development.
“It also means that we will be able to expand our operations, trade freely and compete on an even playing field in both the domestic and regional markets.”
OFAC is a Division within the US Department of Treasury responsible for implementing and enforcing economic sanctions on individuals and companies perceived to be acting contrary to the interests of the US government.
The debilitating sanctions placed not only on ZimRe by the US, had a negative impact on the group’s ability to trade freely on the international and regional markets.
The sanctions not only applied to ZimRe as an entity but to all other organisations associated with or where the group had an interest.
As such, the group’s assets includ- ing cash were blocked.
Cash remittances were intercepted without notice and never reached ZimRe or the intended business partners.
Companies, especially those based in the regional markets were prohibited from opening banking accounts with international banks while some of the group companies were forced to close existing accounts with the international banks.
Also, ZimRe was prevented from conducting business and any financial transactions in the US and with any organisations with US ownership or linkages.
The group was forced to adopt a multi-branding strategy in order to mitigate the effects of the restrictive measures and thereby losing the benefits associated with using the ZimRe brand.
ZimRe was also not able to attract foreign investors to buy its shares or inject capital into the business especially after the adoption of the multi-currency regime in Zimbabwe.
Group businesses were not able to access foreign lines of credit because of the sanctions.
Furthermore, ZimRe entities, especially those operating in the regional markets faced stigmatisation in the market and lost business in the markets.
“The sanctions resulted in loss of prestige, goodwill and market confidence with dire consequences on financial performance.
“Competitors took advantage of the listing to de-campaign ZimRe operations resulting in loss of market share.
“Baobab Re lost market share from being the dominant and leading reinsurer in the domestic market.
“Above all, the sanctions negatively affected the performance and profitability of the ZimRe group.”