• Published on 20 February 2018
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Zimbabwe’s central bank plans gold and tobacco diaspora bonds

Zimbabwe’s central bank said it planned to sell bonds for citizens outside the country to invest in gold and tobacco output as it also introduced banking rules to encourage money flows and exports.

The Reserve Bank of Zimbabwe would provide the market with more information on the diaspora bonds "in due course", it said in a February 13 circular to banks.

The southern African nation was once the world’s second-biggest exporter of top-grade tobacco.

Lenders must give exporters access to all the foreign currency they get from selling goods within 14 days of the funds being deposited, the bank said. Small, non-corporate exporters shipping more than $2,000 of goods no longer need to fill in certain forms, making business easier, the bank said, without saying what the prior, lower threshold was.

The new policies and plans come three months after Robert Mugabe was toppled as president following 37 years in power and replaced by his former deputy, Emmerson Mnangagwa, who has been on a drive to revive the economy and attract investment.
The new administration will allow white farmers to apply for 99-year leases on land compared with five previously and has also pledged to compensate them for improvements that they made to land that was seized.

The nation abandoned the Zimbabwean dollar in February 2009 after an economic collapse saw inflation surge to about 500-billion percent, according to the International Monetary Fund. This resulted in the central bank printing banknotes with a face value of Z$100-trillion. A crippling shortage of cash led to the introduction of so-called bond notes in 2016. While the government says these are equal to the dollar, they are not accepted by foreign suppliers.

Business promotion
The Bank is introducing other initiatives to promote business, having opened a dedicated desk to facilitate investment proposals by Zimbabweans in the diaspora to speed up consideration of the plans. It is also offering a 7% tax-free savings bond.

To ensure that property sales are settled locally, banks must ensure that all foreign-currency proceeds from the sales are available to the beneficiary for use. The Reserve Bank’s exchange-control department will consider exceptions to the policy on an individual basis.

Lenders have to provide the Reserve Bank plans on how they will work to boost the nation’s exports.

All authorised dealers must furnish the Reserve Bank of Zimbabwe’s exchange-control unit with their strategies by March 2, outlining "measurable objectives" such as growth in the number of registered exporting entities and export value per bank," it said in the circular.

Re-disseminated by The Asian Banker from BusinessDayLive.co.za