FINANCE FORUM •
THE REALITY OF DOING
BUSINESS IN ZIMBABWE
By Sharyn Macnamara
African Mining spoke to Dr Blessing Mudavanhu , Chairman of the Commercial Bank of Zimbabwe ( CBZ ) and Marc Holtzman , CEO of CBZ , in a recent Question and Answer session , to shed some light on doing business in Zimbabwe on the finance front .
Zimbabwe is fortunate in that it is a resource-rich country – platinum , chrome , gold , coal , and diamonds are the predominant minerals found in the country . The Chamber of Mines of Zimbabwe reported on 30 August 2021 that the mining sector accounts for about 12 % of the country ’ s gross domestic product ( GDP ) and the minister of mines claims the sector has the potential to generate USD12-billion annually by 2023 , if the government addresses challenges such as persistent power shortages , foreign currency shortages , and policy uncertainties .
Per the Chamber of Mines of Zimbabwe , “ The government intends to amend the Mines and Minerals Act to make it more progressive and investor-friendly to attract more investment .” And , according to the African Mining Market , Zimbabwe ’ s lithium deposits are the largest in Africa and the country has potential to become one of the world ’ s largest lithium exporters due to growing world demand for rechargeable batteries . Development in this sector bodes well for the country .
With these challenges and opportunities in mind , African Mining approached Dr Mudavanhu , and Holtzman , with a few fundamental questions that might assist in clarifying the situation with regards to the ease of business transactions for potential investors , current mining houses and suppliers to the mines in Zimbabwe :
What are the Exchange Control rules and will invested capital be able to be removed / repatriated ?
• All foreign exchange matters are primarily managed under the relevant Exchange Control regulations provided by the Central Bank to Authorised Dealers ( Commercial Banks )
• Transactions that are generally under the Current Account have been liberalised and are therefore managed by Authorised Dealers , who have delegated authority through Directives from the Central Bank .
• On the other hand , transactions that fall under the Capital Account , while managed through the banks , must have prior exchange control approval ; transactions such as FDI , disinvestment , etc . must have prior exchange control approval .
• Since the coming onto the scene of Zimbabwe Investment Development Agency ( ZIDA ), some of the registrations and related transactions are handled through ZIDA , which is a one stop shop for FDI .
• There is provision for invested capital to be repatriated provided the investment was properly registered at the material time .
• Greenfields are registered with ZIDA prior to operation . All other types of investments / disinvestments , dilutions etc . require prior exchange control approval
• Capital injections ( FDI ) should be done through normal banking channels . Proof of transfer of funds into the country is part of the requirements at the time of remittance of the disinvestment proceeds .
Is there sufficient foreign currency to allow disinvested capital and dividends declared to flow out of the country ?
• While the Capital Account has largely been in deficit , there has always been efforts to ensure that when resources permit , such outflows are permitted .
• Dividend remittance does not require prior EXCON approval as long as the applicant has provided the requisite documentation stated in the current directives .
Is there sufficient foreign currency to allow for payment of imports such as mining equipment ? There are a number of avenues through which mining companies can finance the aforementioned imports :
• Own resources arising from net foreign currency proceeds – all exporting companies largely use this route to finance own imports
• Access to the Auction market that allows bidding for foreign currency that is available in the market – this is done once every week
• Open accounts , with obligations being paid on terms , either from own resources or the Auction Market
• Offshore lines of credit
• The Auction Market allocates c . USD30-40-million per week .
Photos by The Commercial Bank of Zimbabwe
1 2
1 . Dr Blessing Mudavanhu , Chairman of the Commercial Bank of Zimbabwe .
2 . Marc Holtzman , CEO of the Commercial Bank of Zimbabwe .
www . africanmining . co . za |
African Mining Publication |
African Mining |
African Mining • February 2022 • 39 |