POLOKWANE — There are no restrictions on offshore borrowing to fund local operations, Reserve Bank of Zimbabwe (RBZ) deputy governor Kupukile Mlambo has said.
In his presentation at the Institute of Chartered Accountants of Zimbabwe (ICAZ) investor conference here on Friday, Mlambo said the bank offers a flexible environment for investors.
“The only requirement is that as from September 1, companies seek RBZ prior approval when contracting offshore loans in excess of
$7,5 million, up from $1 million before.
“This requirement is not put to deter borrowing, but is mainly meant for monitor and balance of payments purposes,” Mlambo said.
He said the reformed exchange control regulations will also allow free payment on interest and capital on borrowed funds without any restrictions.
Mlambo, however, said there were no restrictions on outsourcing of a technical nature on both the local market and abroad such that companies would be able to hire foreign expertise without restrictions.
He said with effect from last month, all non-resident Zimbabweans in the Diaspora are permitted to invest in any listed counter on the Zimbabwe Stock Exchange without any limits.
The participation of non-resident Zimbabweans on ZSE had been increased to 70% from 40% in 2004 to allow the participation of Zimbabweans in the Diaspora on the local bourse.
Mlambo said the government had removed all exchange control restriction on the level of foreign participation on primary issuance of bonds and participation by foreign investors in the secondary market.
He added that investors are also allowed 100% remittances upon request, saying that RBZ had removed the restrictions on the disposal of immovable property and remittance of the proceeds by foreign investors.
Before that, foreign investors were allowed to subscribe for up to 35% of primary issues of bonds provided the purchase was financed by inward transfer of foreign currency through normal banking channels.
Mlambo said the bank was currently undertaking a number of policy measures to promote financial sector stability.
“The bank is implementing sound risk management system in the form of Basel II and III, which are benchmarked to international standards and establishing of the Zimbabwe Asset Management Company to deal with the problem of non-performing loans in the banking sector,” Mlambo said.
He said the bank was also at an advanced stage to establish a Credit Reference Bureau which will assist in limiting the incidences of loan defaults in the banking sector which are aimed at enhancing the financial intermediation role of banks which benefit investment.
Non-performing loans in the sector rose from 1,6% in 2009 when the country adopted the multi-currency to 18,5% ($705 million) as at June 2014.