RBZ doles out US$175m in export incentives

Livingstone Marufu
THE Reserve Bank of Zimbabwe (RBZ) is expected to dole out a chunky $175 million to local exporters under the bond notes export incentive scheme introduced towards the end of last year.

Though US$160 million has since been paid out, $15 million remains outstanding, and will be liquidated in monthly installments.

Export incentives on tobacco, gold and Diaspora remittances are paid in the form of bond notes that the RBZ had targeted to drip-feed into the economy since November last year.

The larger portion of the incentives goes to tobacco growers, who raked in US$750 million in export earnings, followed by the gold mining sector.

The central bank introduced the performance-related export bonus scheme of up to 5 percent mainly to support small-scale producers enhance production and increase exports.

RBZ Governor Dr John Mangudya told The Sunday Mail Business last week that since the introduction of the scheme, payouts have largely been made to exporters in the tobacco and gold sectors.

“We have managed to pay out over $44 million as export incentives to our tobacco farmers since the beginning of the scheme in March last year. We have also paid out $35 million worth of export incentives to gold exporters.

“On Diaspora remittances, we paid over $25 million and the other share belongs to other exporters who are not part of the big three in terms of foreign currency generation.

“So far we have issued out $160 million worth of bond notes against a payment of $175 million worth of export incentives, which means we are $15 million behind the export incentives. So, to cope up with the export incentives, we continue to drip-feed the bond notes monthly depending on exports at hand,” Dr Mangudya said.

Monetary authorities believe the interventions are helping shore up exports.

Noticeably, gold production has improved since the beginning of the year, and output is forecast to grow going forward.

The RBZ says incentives are poised to increase the production of quality tobacco.

Plummeting prices for export commodities, particularly for Zimbabwe, as well as the strengthening of the United States dollar against regional currencies, are making the local economy relatively uncompetitive.

Local industry is still smarting from the lingering adverse effects of the El-Nino induced drought that affected the 2015/2016 agricultural cropping season.

High production costs and a soaring current account deficit also continue to affect industry.

But the export incentive scheme is providing the much-needed fillip.

Dr Mangudya said: “Productivity, which is the panacea to the current economic challenges bedevilling the nation, is gradually increasing.

“We have experienced the reduction in the smuggling of gold as the 5 percent incentive awarded to gold producers over and above the international gold price has been regulative to discourage smuggling.”

“We need more incentives and improved investment climate to jump start our economy … We may do a lot of things, which include importing a lot of foreign currency and issuing out more bond notes, but without localised production and exports, we won’t go anywhere.”

The central bank is encouraged by the increased use of plastic money and electronic banking, which now accounts for 80 percent of sales for major retail outlets and fuel dealers in Zimbabwe. Despite the progress registered on the export front, biting foreign currency shortages are still affecting both Government and industry. Foreign currencies, particularly the US dollar, are critical in importing critical raw materials, the majority of which cannot be sourced locally by manufacturing companies.

 

51,383 total views, 1 views today