RBZ fail to fund Zim investor portfolio fund

Source: RBZ fail to fund Zim investor portfolio fund – The Zimbabwe Independent May 31, 2019


THE Reserve Bank of Zimbabwe (RBZ) has failed to fund the Zimbabwe investor portfolio fund since 2017 due to loss of confidence in the economy by foreign investors, businessdigest has learnt.

Melody Chikono

Funding of the portfolio is critical for attracting new investors on the local stock market given the current challenges faced by foreign investors in moving funds offshore owing to foreign currency shortages.

Central bank governor John Mangudya introduced the fund in his 2017 mid-term-monetary policy to boost investor confidence.

He then appointed Standard Chartered Bank, Stanbic and CBZ bankers for the fund in October the same year premised on the fact that they were going to get a US$1 million seed capital each.

The fund was an attempt to speed up the repatriation of portfolio-related funds to foreign investors on the Zimbabwe Stock Exchange (ZSE).

Sources this week told businessdigest that the banks were yet to receive the seed capital from the central bank.
“The banks are yet to receive the seed capital from the central bank. There has been no communication from the central bank nor have the banks made a follow-up on the matter. They can only wait until the funding is availed,” a high-level banking source said.

Bankers who spoke to businessdigest this week referred questions to Mangudya who did not respond by the time of publishing.

The central bank had said the decision had been taken owing to the need to ease problems around free movement of capital to offshore locations.

“In order to address this challenge, the Bank is establishing a Zimbabwe Portfolio Investment Fund (the Fund) to facilitate the efficient repatriation of portfolio-related funds to foreign investors invested specifically on the Zimbabwe Stock Exchange (ZSE). The move by Mangudya to encourage foreign investors comes at a time foreign direct inflows into the country continue on a downward spiral,” a banker said.

The situation has further deteriorated since then.

The country is facing an acute shortage of foreign currency which has seen government and private companies failing to settle their obligations to foreign suppliers.

The announcement of the separation of nostro FCA balances from RTGS and the introduction of the interbank market this year further eroded confidence in the market as it led to spikes in the parallel market rates.

The February monetary policy statement led to a 42% jump in the All Share Index but the February 2019 initial market reaction shows a decline of 6% in February and 18% in March, while the withdrawal of foreign participation in February 2019 contributed to the slump in the market.