Zim industry engages banks

Source: Zim industry engages banks – DailyNews Live January 13, 2017

Ndakaziva Majaka

HARARE – The Confederation of Zimbabwe Industries (CZI) said it has
engaged financial institutions over delays in foreign payments.

This comes as local industry has been struggling to import raw materials
since late last year due to lack of foreign currency and banks’ delay in
settling international financial obligations.

CZI president Busisa Moyo told journalists on Tuesday that although the
international settling situation had improved from October, diminishing
nostro account balances held by banks were frustrating industry’s ability
to transact internationally and many businesses had failed to pay for
imports.

“While I cannot tell you exactly how much has been lost in terms of
financial value, I can rate the losses and lost opportunities as
significant,” he said.

Market watchers, however, contend that transactions valued at over $1
billion have been stalled by the depletion of local bank’s nostro
accounts.

A nostro account is a bank account held in a foreign country by a domestic
bank mainly to facilitate settlement of exchange and trade transactions.
Thus, when manufacturers make orders, their respective banks then have to
pay the suppliers through the nostro account.

Industry, however, remains optimistic that a change in the country’s
fortunes this year might help reduce the delays in foreign payments.

“The tobacco marketing season is about to start, this will definitely
improve the situation and metal prices are expected to rise this year, so
this may lead to the situation easing,” he said.

Bankers Association of Zimbabwe president Charity Jinya recently said a
number of factors had culminated in the current foreign currency liquidity
shortages.

She said these challenges had largely emanated from a continuing trade
deficit, noting that any issuance of Treasury Bills would “continue to put
pressure on the country’s ability to effect transfers outside the
country”.

She said collective efforts were being made by various stakeholders to
mitigate these challenges.

These measures included restriction of unnecessary imports applied by
banks based on a priority list; a directive by the RBZ to reduce cash
export thresholds for travellers; and the introduction of bond notes by
the central bank, which she said was aimed at stimulating exports.

“Banks are also encouraging the use of electronic and digital payment
platforms for all transactions and streamlining cash withdrawals to reduce
pressure on their Nostro accounts. A combination of these measures, if
supported by the market should improve nostro liquidity and reduce import
payment cycle,” Jinya said.