Tourism players demand RBZ-seized funds

via Tourism players demand RBZ-seized funds – NewsDay Zimbabwe by Bernard Mpofu October 23, 2013

TOURISM players have demanded the repayment of millions of dollars in funds seized by the Reserve Bank of Zimbabwe at the height of the decade-long economic contraction in 2007 in a bid to boost working capital.

In its paper presented at the just-ended Bankers Summer School in Nyanga, Zimbabwe Council of Tourism (ZCT), the umbrella body representing the interests of private sector players in the industry, said tourism, which is currently contributing 6,8% of the gross domestic product, could more than double the figure to 15% by 2015 driven by a conducive business environment and a sound banking system.

Official figures show that tourism earnings currently stand at $770 million.

The council said the general feeling within the tourism sector is that banks are failing in the role of facilitation.

“Cost of keeping money in banks is higher than perceived return in service or interest, therefore there is no real incentive to use a bank,” said ZCT.

“Banking products available are misaligned to the needs of the industry. Where is our money following RBZ raiding of FCAs in 2007?”

This comes a few days after the Supreme Court made a landmark judgment against Standard Chartered Bank after it was sued by a Chinese firm over $47 739 taken by the central bank while in a Standard Bank account.

Asked to comment how much is owed by the central bank, ZCT president Francis Ngwenya said: “I can not give you the figures right now, the issue is being dealt with at a-case-by-case level, but some of the players have made the figures public.”

Zimbabwe Stock Exchange-listed diversified concern Meikles Limited, which operates a five-star hotel recently reported that it is owed $76,5 million by the Reserve Bank which dates back to 1998.

The central bank, which is saddled with a huge debt wrought by funding quasi-fiscal activities, is currently shielded from any litigation.

Also speaking at the same event, corporate law expert Sternford Moyo said Zimbabwe, despite being endowed with vast natural resources, has an inadequate framework for the protection of property rights. This, he said, had spooked foreign direct investors.

“The country is not attractive and appears to be avoided by foreign direct investment inflow particularly in that during the last five years, the country received a total of $1,1 billion in foreign direct investments,” Moyo said.

“This compares very badly to countries like Zambia and Mozambique which received $7,5 billion and $9,8 billion respectively, over the same period.

“Legislation such as the Labour Act, the Indigenisation and Economic Empowerment Act and changes in taxation regimes does not inspire the confidence of investors in long term investment projects such as mining.”

He said government should restore the central bank’s role as lender of last resort to boost confidence in the formal banking sector.

“To enhance confidence, it will be necessary for government to capitalise the central bank to enable it to resume its lender of last resort function. Furthermore, it will be necessary to remove its immunity from execution. The immunity does not assist in enhancing confidence in the central bank,” Moyo said.