Zimbabwe relaxes foreign remittances controls

The Reserve Bank of Zimbabwe (RBZ) is set to introduce relaxed controls on international remittances by April this year, as part of its measures to boost inflows and ease liquidity constraints.

John Mangudya, the RBZ governor, said the central bank "has noted that international remittances continue to play a critical role in bridging the country's financing gap and providing the much needed liquidity in the economy".

This comes as total remittances from the Diaspora increased to $840 million in 2014 from $790 million realised in previous year.

"In order to ensure that the country continues to benefit from international remittances inflows, the Reserve Bank has reviewed the current Exchange Control framework for international remittances and shall introduce an enhanced and integrated framework with effect from 1 April 2015," Mangudya said in 2015 Monetary Policy.

He said the RBZ will avail details of the new exchange control regulatory framework and operational guidelines by end of this month.

Under the new framework, Zimbabwean registered money transfer operators and bureaux de change shall be designated as limited authorised dealers and shall be allowed to conduct both inward and outward money transfers.

"The new Exchange Control framework for international person-to-person remittances shall be administered through a three-tier system," he said.

Mangudya said Tier one shall be locally incorporated money transfer operators (MTOs) partnering with approved international money transfer organisations (MTOs) to carry out both inward and outward international remittances, as well as buy and sell foreign exchange on a spot basis.

"Tier two shall be locally incorporated money transfer operators (MTOs) acting alone, or operating own systems to carry out both inward and outward international remittances, as well as buy and sell foreign exchange on a spot basis," he said.

Under the last tier, bureaux de change shall only buy and sell foreign currency on a spot basis.

The apex bank boss added that in order to enhance monitoring and accounting of international remittances as well as mitigating against money laundering and terrorist financing, the Reserve Bank would employ a robust compliance monitoring framework.

The framework will include among other things electronic surveillance and reporting or such electronic platform that the central bank may designate for the purpose.

"All licensed dealers shall be required to participate and contribute to the establishment of the integrated and centralized payment gateway system," he said.

This comes as during the course of last year, the RBZ relaxed foreign exchange regulations as part of measures to stimulate foreign direct investment.

Kupukile Mlambo, RBZ deputy governor, revealed that the central bank now allowed foreign investors to freely invest in the country without seeking approval.

"We have tried to relax some of the foreign exchange regulations so that we use them not as a means of stopping capital coming out, but a means of facilitating the flow of capital," he said last year at an Imara Investors' conference.

He said the central bank now allowed 100 percent remittance of profits and dividends while local companies could also borrow offshore any amount below $7,5 million without seeking RBZ approval.

Previously, a company would be obliged to inform the central bank if they intended to borrow any amount offshore.