Public Policy / Regulatory Developments In Zimbabwe

Privatisation of State Institutions

Several State-Owned Enterprises (SOEs) have been earmarked for privatisation by the Zimbabwean government under its public enterprises reform framework for 2018-2020. The policy targets mainly SOEs which have been struggling over the years, principally due to mismanagement and undercapitalisation.1 In this process the government is also intent on attracting foreign investors.2 In terms of the framework, the targeted entities have been given between six and nine months to conclude privatisation deals with investors, with the view towards either partial or full privatisation.3

Separation of Nostro Foreign Currency Accounts and RTGS Foreign Currency Accounts

One of the greatest hindrances to investment in Zimbabwe, especially for foreign investors, has been the absence of foreign currency to back the payment of dividends or when exiting. This has been caused by the delusional policy of alleging that a surrogate currency called the bond note is equal to a United States Dollar in value and is denoted in USD. The effect of this was that real USD deposited into your account and these bond notes were somehow added together and the bank account marked in USD. The result of this was a shortage of foreign currency on the market.

In its October 2018 Monetary Policy Statement, the Reserve Bank of Zimbabwe directed the banking institutions to open separate Nostro Foreign Currency Accounts and RTGS Foreign Currency Accounts.4 The deadline for such implementation was given as 15 October 2018. The Nostro Foreign Currency Accounts will exclusively hold foreign currency free funds, diaspora remittances, international organisations' remittances, portfolio investment inflows, loan proceeds and export retention proceeds. The RTGS Foreign Currency Accounts will hold local funds which are only capable of being utilised locally, i.e. a de facto local currency. The policy is also meant to encourage banking of foreign currency and address fears by both locals and foreign investors that foreign currency will be incapable of being repatriated or used abroad, once banked in Zimbabwe.

The government is also in the process of promulgating a law that will protect the foreign currency accounts from being raided by the government and give security to investors that their money will be safe.5

Proposed new legislation: the Companies and Other Business Entities Bill

A new Act to replace and update the law governing companies and private...