RBZ readies to inject $300m export incentive facility

RBZ readies to inject $300m export incentive facility
Published: 12 November 2017 (1016 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

Looting soldier shot during protests

by Mandla Ndlovu | 17 January 2019 | 243 Views

How drug offences can affect your life

by Staff Reporter | 17 January 2019 | 66 Views

Zimbabweans march to ANC headquaters over Mnangagwa

by Mandla Ndlovu | 17 January 2019 | 153 Views

Mnangagwa meets Belarus President

by Staff reporter | 17 January 2019 | 79 Views

Who used the extra 480 million litres of fuel the last six months?'

by Staff rpeorter | 17 January 2019 | 120 Views

Mnangagwa signs 8 MOUs in Belarus

by Staff reporter | 17 January 2019 | 74 Views

Govt meets transporters over fares

by Staff reporter | 17 January 2019 | 94 Views

Military in civilian life: lessons from the fall of Mugabe

by The Source News Agency | 17 January 2019 | 70 Views

'Zimbabwe potential hub for industrial development in Africa'

by Staff reporter | 17 January 2019 | 60 Views

ZRP heightens crackdown against criminals

by Staff reporter | 17 January 2019 | 58 Views

Zimbabwe counts huge costs of stay-away

by Staff reporter | 17 January 2019 | 41 Views

Zesa dismisses social media messages

by Staff rpeorter | 17 January 2019 | 62 Views

Gun-wielding soldiers assault Daily news staff

by Staff reporter | 17 January 2019 | 66 Views

Mnangagwa's re-engagement efforts with Western countries is dead

by Staff reporter | 17 January 2019 | 65 Views

Police should probe vandalism, looting

by Staff reporter | 17 January 2019 | 57 Views

Military door-to-door raids slammed

by Staff reporter | 17 January 2019 | 58 Views

Trial of 'Shut-down' protesters fast-tracked

by Staff reporter | 17 January 2019 | 52 Views

'Internet shutdown draconian'

by Staff reporter | 17 January 2019 | 52 Views

MDC Alliance's Chibaya remanded in custody

by Staff reporter | 17 January 2019 | 34 Views

How to win at slots? Top slot tips & tricks

by Staff Reporter | 17 January 2019 | 62 Views

Stay away: A manifestation of the MDC's violence DNA

by Nobleman Runyanga | 17 January 2019 | 101 Views

Kirsty Coventry has not resigned from ministry

by Mandla Ndlovu | 17 January 2019 | 104 Views

Mnangagwa and Gen Chiwenga responsible for lootings, shootings and terrorism

by Dr Nkululeko Sibanda (Presidential Spokesperson) | 17 January 2019 | 133 Views

A tale of a school teacher

by Virimayi Chidembo | 17 January 2019 | 101 Views

My encounter with the rowdy protestors

by Betty Gatsi | 17 January 2019 | 73 Views

Price of bread now $6

by Mandla Ndlovu | 17 January 2019 | 122 Views

The unleashing of army to descend on demonstrators was uncalled for

by Leonard Koni | 17 January 2019 | 63 Views

How Facebook and Whatsapp fuelled chaos and confusion in Zimbabwe

by Dr Masimba Mavaza | 17 January 2019 | 63 Views

Mnangagwa pleased with Putin meeting

by Staff reporter | 17 January 2019 | 137 Views

Mnangagwa opens consulate in Belarus

by Staff reporter | 17 January 2019 | 149 Views

MDC perpetrating violence, violating human rights

by Anesu Pedzisayi | 17 January 2019 | 147 Views

3 Religious Sites to Visit When in Israel

by Staff Reporter | 17 January 2019 | 97 Views

BREAKING: Evan Mawarire charged with treason

by Mandla Ndlovu | 17 January 2019 | 237 Views

'100 men abaducted in Matabeland during protests'

by Mandla Ndlovu | 17 January 2019 | 145 Views

Army continues terror as Bulawayo is shutdown

by Mandla Ndlovu | 17 January 2019 | 302 Views

Here's what motorists are paying for fuel around the world

by wheels24 | 17 January 2019 | 238 Views

Bond notes and their possible long-term legacy

by Staff reporter | 17 January 2019 | 166 Views