Foreign investors to easily repatriate funds: Government
Prosper Ndlovu, Business Editor
THE Reserve Bank of Zimbabwe (RBZ) will soon issue a directive to facilitate smooth repatriation of capital and dividends by foreign investors, which will buttress the ease of doing business in the country.
Treasury is pushing the matter in response to investor concerns over the country’s exchange and capital controls, which are perceived to be a stumbling block to attracting foreign direct investment.
Finance and Economic Development Minister, Professor Mthuli Ncube told a recent virtual market analyst briefing on the establishment of the Victoria Falls Stock Exchange (VFEX) that the challenge of repatriating funds was being addressed following lengthy discussions with the Zimbabwe Stock Exchange (ZSE) executives and the RBZ.
He said the framework, to be soon tabled by the Central Bank, will also give impetus to the successful operationalisation of an offshore capital market in the form of VFEX, a wholly-owned subsidiary of the ZSE.
The minister was responding to sub-Saharan Africa economist at Renaissance Capital, Yvonne Mhango, who said the difficulty in repatriating funds was a big investor concern that Zimbabwe needs to urgently resolve.
“It makes sense initially to make our central bank, the Reserve Bank of Zimbabwe, involved more directly in the settlement process. That is being fine-tuned and that will be the case, the reason being to deal directly with what Yvonne raised,” said Prof Ncube.
“We want guarantees that there will be full conversion and there is commitment from the Government and RBZ that the foreign currency will be made available.
“That’s why we want RBZ to be involved initially (at VFEX) but over time other banks with strong balance sheets and skills would also be involved.”
Given that VFEX will be denominated in the United States dollar, investors are keen to get guarantees on the ease to repatriate their dividends unlike what is happening on ZSE now, said Mhango.
ZSE chief executive officer, Mr Justin Bgoni, who also attended the webinar, concurred with Prof Ncube. “This is one of the areas where we have put in a lot of work on, especially with the Central Bank. Shortly the central bank will be issuing out a directive that will address a lot of these concerns including how investment can be done on the exchange,” he said.
“A lot of that will be very clear, it would be easy for foreign investors to come in and go out. Without disclosing much because we are finalising the discussion with the reserve bank, what I can promise is that the Reserve bank has been very forthcoming, they understand this concern and the directive that will come will be very clear.
“I can promise it will be easy for investors to come in and easy for them to repatriate funds.”
VFEX was recently issued with a licence and would be denominated in foreign currency. It targets foreign investors as well as global capital markets especially the mining industry. Government is already engaged in ongoing discussions with several international investment financiers to support VFEX that will trade exclusively in foreign currency.