RBZ relaxes exchange controls

via RBZ relaxes exchange controls – DailyNews Live 15 October 2014 by Kudzai Chawafambira

HARARE – The Reserve Bank of Zimbabwe (RBZ) has relaxed foreign exchange regulations as part of measures to stimulate foreign direct investment.

Kupukile Mlambo, RBZ deputy governor, said the central bank now allows foreign investors to freely invest in the country without seeking approval.

“We have tried to relax some of the foreign exchange regulations so that we use them not as a means of stopping capital coming out, but a means of facilitating the flow of capital,” he said.

He said the central bank now allows 100 percent remittance of profits and dividends while local companies can also borrow offshore any amount below $7,5 million without seeking RBZ approval.

Previously, a company would be obliged to inform the central bank if they intended to borrow any amount offshore.

“All we require is if the amount is above $7,5 million, the company should inform the RBZ. That information is not because we want to stop investments from coming in, but it’s because of balance of payments purposes we need to keep track of what is coming in,” said Mlambo.

“We have also allowed Zimbabweans in the Diaspora to invest 100 percent on the stock market. That is a way of using Diaspora funds as a way of deepening our capital markets,” said the deputy governor.

As part of efforts to attract more capital into the local market, Mlambo said foreign investors were also being allowed to invest 100 percent on the bond market.

“For as long as the money is coming from outside, they (foreign investors) can also fully remit it if they want to. They are allowed to invest both in the primary and secondary bond markets,” he said.

Mlambo said in order to gain confidence in the market, they were sticking to the multi-currency system in order ensure investment security.

Through the RBZ, government said there was need to articulate a comprehensive, credible and transparent operational and administrative framework in the implementation of policy measures.

As part of the measures, regulations require specific applications to be made to exchange control authorities for the remittance of proceeds arising from disposal of immovable property.

“The remittance of proceeds emanating from disposal of immovable property purchased by individuals with external financial resources shall be handled by Authorised Dealers on production of relevant documentation,” read part of the directive.

This is in order to protect the Capital Account, as well as allow property owners to make use of their sale proceeds in a manner that enhances liquidity in the market.

“The remittance of proceeds emanating from disposal of immovable property purchased by individuals using local financial resources shall be submitted to Exchange Control for consideration,” it said.