Zim Reserve Bank soothes jittery investors

Harare - The Reserve Bank of Zimbabwe (RBZ) has reassured foreign investors that remittance of capital is a top payment priority, and that payments will still be made in United States dolllars.

In a joint statement with the Zimbabwe Stock Exchange (ZSE), the RBZ said its Exchange Control Guidelines and Compliance Framework emphasises that the remittance of capital, capital repatriation and dividends is in the first priority category of payments “to ensure that foreign investors on the ZSE are not disenfranchised access to their capital”.

The RBZ also assured investors that the ZSE will continue to settle all transactions in dollars, and that this position will not change when the bond notes are introduced.

“Bond notes issued for the purpose of incentivising exporters will circulate in the market alongside currencies within the multi-currency system and will be at par i.e. one on one with USD,” said the joint statement, adding that settlement of trades executed on the ZSE “will take place in USD through normal banking channels”.

The statement comes at a time when foreign investors are fretting over repatriation of their investments from Zimbabwe, which is battling with depleted foreign exchange accounts.

As a result, trading on the ZSE - which is dominated by foreign investors - has been subdued, averaging $0.5m per week compared with an average of $1.5m per day last year.

Since the beginning of the year, Zimbabwean companies have also been struggling to make foreign payments resulting in a shortage of raw materials which is halting production.

Asbestos-making company Turnall this week told analysts that production in the first half of the year was low due to issues around foreign payments to its suppliers.

In July, British American Tobacco also told analysts that it was struggling to remit dividend payments worth $4m to its parent company.