rbz pays $72,9m in incentives

Source: rbz pays $72,9m in incentives | The Herald January 6, 2017

Business Reporter —
THE Reserve Bank of Zimbabwe says it has to date paid $72,9 million as incentives to exporters, the bulk of which went to gold producers, tobacco farmers and diaspora remittances.

The bank also said use of plastic money now accounted for 50 percent to 70 percent of sales for most big retailers in Zimbabwe while efficient circulation of bond notes had reduced the demand for cash.

RBZ governor Dr John Mangudya said in a statement yesterday that the export incentives paid covered 80 percent of exporters of goods and services, including diaspora remittances, fully paid by end of last month.

Dr Mangudya said major beneficiaries under the 5 percent export incentive were tobacco farmers who received $29,5 million, gold producers $10 million and diaspora remittances who pocketed $5,4 million.

The incentives are being paid through bond notes.

“This is in line with the bank’s projection of bond notes that should have been issued during this period under the export incentive scheme,” he said.

Dr Mangudya said the incentive came at the right time given challenges in 2016 for Zimbabwe and the global economy.

“A sudden collapse in the prices of export commodities of interest to Africa, and Zimbabwe in particular and the appreciation of the US dollar transmitted serious negative economic shocks to the economy.

Dr Mangudya said the challenges that faced the economy during this period required the central bank to intervene to minimise the damage.

Against these challenges, worsened by El Nino induced drought, the RBZ chief said he was pleased that a number of firms that had ceased exports due to an uncompetitive environment punctuated by high cost of production and a strong US dollar, had resumed exports.

Production, which the central bank contends is the panacea to economic challenges bedeviling the economy, was gradually increasing.

“This includes the expansion of the tobacco crop this agricultural season and the reduction of smuggling of gold, as the 5 percent awarded to gold producers over and above the international gold price has been regulative to discourage smuggling,” Dr Mangudya said.

According to statistics released by the Tobacco Industry and Marketing Board (TIMB), at least 80 327 farmers had registered to grow tobacco during the 2016 /17 cropping season by December 31, a 14 percent increase from 70 161 recorded at the same time last year.

Zimbabwe is targeting to produce 22 tonnes of gold this year, marginally lower than the 25 tonnes initially targeted, after deliveries were temporarily affected by cash shortages, which has been resolved.

Last year, the country produced a total of 18t of bullion.

The bank said it was pleased with the widespread use of plastic money, electronic banking and efficient circulation of Zimbabwe surrogate currency had significantly reduced the demand for hard cash.

“This paradigm shift is encouraging, as it has the positive effect, together with the efficient circulation of the bond notes, of reducing the demand for cash in the national economy,” Dr Mangudya said. He added that this will reduce queuing for cash at banks.

The central bank chief said that long queues for cash at banks did not reflect lack of money in the economy, but the need to continuously promote use of plastic money and electronic payment methods.