RBZ readies to inject $300m export incentive facility

RBZ readies to inject $300m export incentive facility
Published: 12 November 2017 (847 Views)
The Reserve Bank of Zimbabwe (RBZ) is set to introduce a new $300 million export incentive facility at the end of this month, as it accelerates efforts of generating the much-needed foreign currency.

The $300 million facility, which will come in the form of bond notes, has been arranged by the African-Export Import Bank (Afreximbank).

This facility will take the bond notes in circulation to $500 million, after the Afreximbank supported the first $200 million facility which hit the market in November last year.

It is widely expected that the $300 million facility would not only spur exports and consequently generate more foreign currency, but also improve general liquidity in the country as ordinary depositors can withdraw the money once the RBZ releases it to banks.

The physical cash situation in the country is deteriorating, with some depositors especially pensioners — having begun to sleep in bank queues fancying their chances of withdrawing their money the following morning.

RBZ Governor Dr John Mangudya told our sister paper, Business Weekly that the intervention is in tandem with the central bank's drive to grow the production base, and diversify the export sector so as to reduce risks associated with over-reliance on a few export products.

Already, the RBZ has introduced a new 12,5 percent incentive for industrial exports to expand the country's foreign currency earnings base.

In addition, the Afreximbank has also availed an enhanced nostro stabilisation facility of $600 million to help banks process foreign payments that are now impacting on industry's production capacity.

The change of narrative towards exports is essential in order for the country to focus on foreign exchange generation as the critical missing link that requires policy interventions to re-balance the economy.

Said Dr Mangudya: "We are in the final stage of the $200 million export incentive scheme and as soon as it expires, we will release another $300 million into the market.

"We expect the new facility to start working by this month-end. The new export incentive will be a continuation as there shall be no gap to say we wait for days to release the new bonus incentives."

The RBZ says at the moment, there is $1 billion in circulation made up of bond coins ($25 million), bond notes ($195 million) and multiple currencies dominated by the US dollar ($800 million).

Dr Mangudya believes that $1 billion is sufficient to support the usable bank balances as measured by the RTGS balances, currently sitting at around $1,6 billion in the banking system.

However, the central bank chief is worried that the bulk of the cash is not making its way back to the formal banking sector.

The parallel market holds the bulk of the money, which is being sold at a premium.

"We need to be disciplined in the utilisation of foreign currency. "Money has to circulate and in that way, we can unlock value from this economy. Our economy can be transformed through fiscal discipline.

"We need to bank our money so that it can circulate in the formal market. We are having these problems because most retailers and businesspeople are not banking their money," said Dr Mangudya.

Several businesses have been fined for not banking their daily takings. But despite the fines, other businesses remain defiant.

Turning to the 12,5 percent export incentive, Dr Mangudya said the new incentive for industrial exports has received the backing of economists who say the measure will boost exports.

Leading economist, Professor Ashok Chakravarti, who is also working with the Office of the President and Cabinet (OPC) in the various reforms pertaining to ease of doing business in the country, says the move by Dr Mangudya to introduce a 12,5 percent incentive for industry is "very commendable".

"The RBZ is taking various measures and has been quietly introducing measures without telling all of us. The Governor has recently introduced a 12,5 percent incentive for industrial exports which is very commendable.

"That will certainly make a difference to the declining trend in industrial exports although, of course, the private sector has to do more in terms of their own internal devaluation," said Prof Chakravarti.

In its Sub-Saharan Africa Regional Outlook, the International Monetary Fund (IMF) believes export diversification is central to generating more revenues.

Dr Mangudya says diversifying exports removes an over-dependence on a few products such as gold and diamonds, whose prices are not determined locally, but internationally.

This means when commodity prices decline, the country would be at risk, "so diversification is very critical".

"Export development is a must, more so, in a dollarised economy. "You need to earn foreign currency, you need forex for critical raw materials.

Therefore, earning forex is a must in an environment like this," said Dr Mangudya.


- sundaynews

Tags: RBZ, Export, Incentive,
 0

You May Like These Videos

Comments

There are no comments.

Latest stories

MDC dismisses Party Spokesperson

by Staff reporter | 19 June 2018 | 317 Views

MDC Founding Member calls upcoming elections fair and reasonable

by Knowledge Moyo | 19 June 2018 | 239 Views

You are Zimbabwean because Zapu said so

by Ryton Dzimiri | 19 June 2018 | 179 Views

Wining Zanu PF candidate vows to stand as an Independent

by A Mhlongo | 19 June 2018 | 336 Views

Chamisa says Mnangagwa want to kill him

by Staff reporter | 19 June 2018 | 365 Views

Looking for Pythias Makonese, please get in touch

by Ignatius Mabasa | 19 June 2018 | 147 Views

Zimbabwean immigrant appointed new senator in Canada

by Agencies | 19 June 2018 | 251 Views

Mnangagwa's lies exposed

by Staff reporter | 19 June 2018 | 332 Views

WATCH: CCTV sells out POS machine suspected thieves

by Staff reporter | 19 June 2018 | 188 Views

Zimbabwean gangster jailed 24 years in UK

by Agencies | 19 June 2018 | 202 Views

Mnangagwa challenges ZCDC

by Staff reporter | 19 June 2018 | 181 Views

Why digital money makes sense

by Nick Mangwana | 19 June 2018 | 142 Views

RBZ told to 'delegate forex allocation to banks'

by Staff reporter | 19 June 2018 | 162 Views

Govt sets aside $150m for Command Housing

by Staff reporter | 19 June 2018 | 173 Views

Zamalek table Khama Billiat offer

by Staff reporter | 19 June 2018 | 195 Views

UK embassy exposes MDC Alliance

by Staff reporter | 19 June 2018 | 245 Views

Chamisa unfit to lead Zimbabwe says Mangoma

by Staff reporter | 19 June 2018 | 202 Views

Adoption of MDC-T by Dr Khupe was 'mischievous'

by Staff reporter | 19 June 2018 | 194 Views

Police ban dangerous weapons

by Staff reporter | 19 June 2018 | 145 Views

'Call me Zodwa Wabantwana'

by Staff reporter | 19 June 2018 | 223 Views

Chamisa can't withdraw Alliance candidates says Welshman Ncube

by Staff reporter | 19 June 2018 | 188 Views

Mnangagwa heads to Mashonaland Central

by Staff reporter | 19 June 2018 | 147 Views

No load shedding, says Zesa

by Staff reporter | 19 June 2018 | 118 Views

Year-on-year inflation remains constant at 2.71%

by Staff reporter | 19 June 2018 | 130 Views

Zec says polls can't be stopped

by Staff reporter | 19 June 2018 | 115 Views

Zec to unveil ballot printing company

by Staff reporter | 19 June 2018 | 128 Views

Woman kills, dumps newborn

by Staff reporter | 19 June 2018 | 135 Views

Chamisa swallows Dabengwa

by Staff reporter | 19 June 2018 | 238 Views

12 years jail for church burglar

by Staff reporter | 19 June 2018 | 111 Views

Pregnancy storm after teens' incest

by Staff reporter | 19 June 2018 | 151 Views

FreeZim wins t-shirts wrangle with ZRP

by Staff reporter | 19 June 2018 | 87 Views

'Mugabe was told of missing diamonds'

by Staff reporter | 19 June 2018 | 111 Views

Calls for Kasukuwere's arrest

by Staff reporter | 19 June 2018 | 98 Views

Mujuru speaks on national healing

by Staff reporter | 19 June 2018 | 71 Views