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Zida ready to engage RBZ on forex retention



ZIMBABWE’S investment agency says it is ready to engage with the central bank over new foreign currency retention thresholds should investors express worry over the new policy shift.


Last week, analysts warned that the Victoria Falls Stock Exchange (VFEX) could lose its sparkle as a haven for investors seeking returns in hard currency following a decision by the Reserve Bank of Zimbabwe to cut the foreign currency retention threshold on exports and other sectors to 75% from 100%.

Zimbabwe Investment and Development Agency (Zida) chief executive Tafadzwa Chinamo (pictured) told The NewsHawks that wide consultations are critical in formulating policy which may unnerve investors.

“So obviously, we are not involved in that stage of this monetary policy,” Chinamo said.

“We obviously see these things and the best I can say is that those investors who are affected directly will come to us and start asking these questions and so forth. So that when we start using those platforms for Memorandum Of Understanding to engage the central bank for revision. But an ideal situation is wide consultation and that would be better.”

The Monetary Policy Committee announced that it would lower the threshold, triggering fears that the authorities in Harare were on the brink of abandoning the current monetary system for the sole use of the domestic currency.

The government has since allayed those fears by announcing that the multi-currency system will be in place until 2030.

 “With effect from 1 November 2023, foreign currency retentions on exports shall be standardised at the level of 75% across all sec[1]tors of the economy and all special dispensations granted to some sectors of the economy shall be removed,” Reserve Bank of Zimbabwe governor John Mangudya said in a statement.

 The VFEX offers tax incentives for shareholders that include a 5% withholding tax on dividends and no capital gains tax on share disposal.

Shareholders would be able to retain more of their earnings compared to the Zimbabwe Stock Exchange.

Capital raised through a VFEX listing may be held in an approved local or offshore account, and there would be an allowance for offshore settlements for executed trades for easier repatriation of dividends and more transactional flexibility to existing shareholders.

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