Following the proclamation of Statutory Instrument 142 which reintroduced the Zimbabwe Dollar as the only legal tender accepted within Zimbabwe for payment of goods and services, the Reserve Bank of Zimbabwe has now issued Exchange Control Directive RU102 of 2019 to Authorised Dealers, spelling out and clarifying the SI issued on June 24, 2019.
We list below some highlights of the Exchange Control Circular and how the changes will affect both corporate customers of banks and ordinary citizens.
Removal of the multi-currency system
The Reserve Bank has reaffirmed that all domestic transactions will now be settled in Zimbabwe dollars, the sole legal tender in the country. Multi-currencies, that is, USD, GBP, ZAR, El-JR, BWP, JPY, CNY, AU$ and Indian Rupee shall only be used to settle international payments.
Holding any type of foreign exchange cash has not been banned. However, if individuals wish to transact inside Zimbabwe, they must convert the foreign exchange to Zimbabwe dollars first and then utilise such ZWD for transactions within Zimbabwe.
Nostro FCAs shall remain in place for purposes of receiving offshore funds and to facilitate foreign payments, particularly in relation to corporate clients of Authorised Dealers.
What is important to note is that the operations of FCAs for individuals will remain unchanged as long as they are funded with Diaspora remittances, donations from non-residents and foreign currency cash deposits.
Foreign currency cash withdrawals
Prior to the proclamation of SI142, corporate customers were allowed to withdraw from their Nostro FCAs unconditional amounts of foreign exchange. This has now been repealed and – effective immediately – this will no longer be permitted except on a case-by-case basis subject to the application of Know Your Customer (KYC) and Customer Due Diligence (CDD) principles on the withdrawer.
For individuals, there is NO CHANGE to the existing withdrawal and deposits into the accounts that was already in place prior to June 24.
Authorised Dealers have been instructed to transfer all RTGS Dollar balances in relation to legacy debts; that is corporate debts that are already in place, registered with the RBZ, to the Central Bank. Such debts amount to RTGS$1.2 billion and they will be transferred at the rate of 1:1.
Retention thresholds for export receipts, loan drawdowns
Retention thresholds, the time that corporates are allowed to hold on to their foreign currency balances, have been retained and there is no change to the existing retention allowances. The retention period within which an exporter is entitled to use their retained export receipts for authorised payments remains within 30 days from the date of receipt.
If not utilised within 30 days, such foreign exchange must be sold on the Interbank Market.
Removal of US$1O OOO limit on bureaux de change transactions
Prior to the proclamation of SI142, bureaux de change were only allowed to transact up to US$10 000 per day. This has now been removed and bureaux de change will now have no limit to the amount of foreign exchange that they are allowed to transact on a daily basis.
This will make it easier for ordinary citizens and tourists to, at any time, sell or buy their foreign exchange cash via bureaux de change.
Zimbabwe Stock Exchange dual-listed shares
The issue of dual-listed shares such as Old Mutual which is traded on the Zimbabwe, Johannesburg and London Stock Markets has also been addressed. The RBZ has directed that for investors who have already acquired dual-listed shares on the ZSE and wish to sell such shares will only be allowed to do so if the shares were purchased on or before March 20, 2019.
For investors wishing to uplift dual-listed shares from external bourses for purposes of selling the shares on the ZSE, such sales shall only be allowed to be executed after 90 days from the date of registration on the ZSE.
Receipts of foreign exchange via money transfers
Diaspora remittances shall continue to be received in foreign currency. The recipients, ordinary Zimbabweans, shall have the option to receive remittances in cash or sell their remittances on a willing-seller willing-buyer basis to bureaux de change or Authorised Dealers or deposit into their individual Nostro FCAs.
Andy Hodges is a banker and ZTN News Senior Business Correspondent