RBZ introduces direct access to forms CD1, disintermediates banks

By | June 15, 2017

Source: RBZ introduces direct access to forms CD1, disintermediates banks – NewsDay Zimbabwe June 15, 2017

The Reserve Bank of Zimbabwe (RBZ) recently issued a Press statement as part of its efforts to enhance the ease of doing business in Zimbabwe. “In order to reduce time taken to prepare export documentation, and for the convenience of the exporters, the Form CD1 is now directly accessible via Internet, through the Computerised Export Payments Exchange Control System (CEPECS),” said the apex bank’s exchange control division in the statement dated June 1, 2017.

OMEN MUZA

The CEPECS is a web-based and real time exchange control system that links the RBZ to commercial banks, the Zimbabwe Revenue Authority (Zimra), exporters and other government agencies that facilitate and promote export of goods and services. This article explores some of the key implications of this regulatory development.

Convenience

Once exporters migrate to CEPECS, they will be able to raise Forms CD1, and generate export performance reports in the comfort of their own offices, thereby eliminating the expense of multiple trips to the bank and the attendant follow-ups. CEPECS also enables exporters to raise Forms CD1 outside banking business hours, on weekends and/or during public holidays something that should help to evenly distribute the flow of exports documents through the country’s ports of exit. All this, of course, translates to convenience, which in this case is contextualised as “ease of doing export business” and will enable exporters to expedite their export orders and ultimately improve the inflow of foreign currency into the country. However, before exporters can enjoy these benefits, they will need to go through a user registration process followed by allocation of usernames and passwords by the RBZ’s Exports Department, enabling them to log onto the CEPECS website.

ICT and operational considerations

Apart from access to the Internet, no additional software installations are required on the part of exporters in order to have direct access to CEPECS. For its part, the RBZ must, however, ensure that its Export Department is adequately manned so that authorisation of the Form CD1 is done promptly in order to avoid bottlenecks that would render the operation of the new system sub-optimal. For instance, if a nominated person forgets their password, the export department should be able to reset it promptly in order to avoid delays.

It is clear that the RBZ has centralised the process of issuance of forms CD1 and in its statement indicates that: “Any assistance required by an exporter to raise a Form CD1 or generate an export performance report, can be provided by contacting an Exports Facilitator/Analyst.” The RBZ will now be the main point of contact with exporters as far as forms CD1 are concerned and the apex bank should be under no illusion about the amount of work involved hence the need to configure itself appropriately.

Exchange control also commits that responses to export applications that require prior exchange control approval will be provided within three working days from the date of receipt of such applications. This is an area in which the RBZ must put its money where its mouth is because, from experience, the reality could turn out to be something totally unpalatable, to the utter dismay of both banks and exporters.

Disintermediation

While contemplating the impact of this development, the first thing that came to my mind was that while most welcome — given the objective of enhancing exporter convenience — the move has the effect of disintermediating banks. Previously, forms CD1 were accessible through banks which issued manual forms CD1, captured them in the system for approval after they had been completed manually by the customers; and managed the acquittal process.

From an operational point of view, the new arrangement can still be a good thing for banks as it takes away significant administrative burden, meaning that they can focus their energies on improving service levels in other aspects of their operations. Any officer in the export department of a local bank will confirm how cumbersome the process of issuing forms CD1 could be.

Loss of revenue

In the Press statement, the RBZ states that the “raising of Forms CD1 through commercial banks remains in place to accommodate those exporters who may still want to access Forms CD1 via commercial banks.” Logically, it will not make sense for exporters to go through banks when they can go directly to the RBZ through CEPECS. Ultimately, the majority of forms CD1 will be raised without the intervention of banks and this implies loss of revenue on their part since they used to charge $5 for each Form CD1. In the Press statement, the RBZ does not indicate whether it will be charging for its services on the CEPECS and whether banks can charge for their services.

What is also not clear from the RBZ’s statement is how banks will monitor the expiry of Forms CD1 since issuance can happen without their knowledge, yet export proceeds must be received through normal commercial banking channels. If the CEPECS does not promptly notify the relevant banks of forms CD1 issued in their names, follow up and acquittal of forms CDI could remain problematic, much to the chagrin of banks.

Omen N. Muza is the founder and editor of the MFSB. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8 or initiate contact on omen.muza@gmail.com.

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