EXCHANGE CONTROL GUIDELINES TO
AUTHORISED DEALERS

on

External Sector Policy Measures Issued in the July 2014
Monetary Policy Statement.


1 SEPTEMBER 2014


ECOGAD1/2014 is issued as an attachment to Exchange Control Directive RP141: dated 1 September 2014, as part of
operational and administrative modalities for External Sector Policy Measures announced in the July 2014 Monetary Policy
Statement by the Governor, Dr. J. P. Mangudya
FOR USE BY AUTHORISED DEALERS ONLY

Table of Contents

Category 7: Unauthorised Use of Export Proceeds to establish Cross-border


TABLES

Table 1: Graduated Exchange Control Flagging for Exporters (1 Sept to 30 Nov 2014)
Table 2: Exchange Control Flagging Framework after Reprieve Period
Table 3: Exchange Control Flagging of Corporate Importers

ANNEXURES

Annexure 1: Exchange Control Absolute Amnesty Declaration Form (ECAAD)
Annexure 2: Exchange Control Outstanding Bill of Entry Declaration Form (ECOBED)
Annexure 3: Exchange Control Service Payment Declaration Form (ECSPAD)
Annexure 4: Exchange Control Guidelines for External Borrowing (ECGEB)
Annexure 5: Exchange Control EC Form 2L

ABBREVIATIONS AND DEFINITIONS

Authorised Dealers
:
Local Commercial and Merchant banks licenced by the
Exchange Control to deal in foreign currency.
CEBAS
:
Computerised Exchange Control Batch Application System
CENAMS
:
Computerised Exchange Control Nostro Accounting and
Monitoring System
CEPECS
:
Computerised Exports Payments Exchange Control System
CSD
:
Central Securities Depository
ECAAD1
:
Exchange Control Absolute Amnesty Declaration Form
ECBED
:
Exchange Control No Bill of Entry Declaration Form
ECGEB : Exchange Control Guidelines for External Borrowings
ECGAD
:
Exchange Control Guidelines to Authorised Dealers
ECSPAD
:

Exchange Control Service Payments Declaration
ELECRC
:
External Loans and Exchange Control Review Committee
Exchange Control
:
Exchange Control arm of the Reserve Bank of Zimbabwe, unless
otherwise stated.
EXCORS
:
Exchange Control Compliance Rating System
Exporter
:
Any person or company in Zimbabwe who takes goods or causes
goods to be taken out of Zimbabwe
FCA


:
Foreign Currency Account
Foreign Investor :
An individual, consortium or corporate entity holding equity or
shares in a local company.
Form EC-2L

:
Declaration
Form
for
all
foreign
currency
inflows
Form CD1


:
Currency/Customs Declaration Form specifying the value of
exports, commissions and freight.
Form CD3
:
Foreign Currency Declaration form completed by locally
registered freighters
Form PTS1


:
Posts & Telecommunications Form
Form TRAS1

:
Foreign currency declaration form for non-consumptive tourism
IPO


:
Initial Public Offer
MPS
:
Monetary Policy Statement

OFAC
:
Office of Foreign Asset Control
RTGS


:
Real Time Gross Settlements
ZDMO


:
Zimbabwe Debt Management Office
ZIMRA


:
Zimbabwe Revenue Authority
ZSE


:
Zimbabwe Stock Exchange

1.
Introduction

1.1
Pursuant to the July 2014 Monetary Policy Statement announced by the
Governor, Dr. J. P. Mangudya, on 25 August 2014, the Guidelines detailed
herein are intended for use by Authorised Dealers in the implementation of
external sector policy measures contained therein.

1.2
These Guidelines are issued to detail in a convenient form to the law
contained in the Exchange Control Act, [Chapter 22:05] and the Exchange
Control Regulations. Furthermore, these Guidelines are issued to clearly
communicate to Authorised Dealers a comprehensive operational and
administrative Exchange Control framework for processing of transactions
covered under the aforementioned external sector policy measures.
Authorised Dealers should at all times adhere to the minimum provisions
outlined in these Guidelines to ensure operational efficiency and
administrative effectiveness.

1.3
These Guidelines shall also form the basis for establishing compliance by
Authorised Dealers in terms of the Exchange Control Compliance Rating
System (EXCORS).

Any enquiries relating to these Guidelines should be addressed to:
The Director
Exchange Control Division
Reserve Bank of Zimbabwe
80 Samora Machel Avenue
P O Box 1283
HARARE

Email:
Tel: +263(04)703000: Fax: +263(04)703716
Website: www.rbz.co.zw

2.
Amnesty to Non-Compliant Market Participants

2.0
In order to ensure the resolution and closure to all recurring and outstanding
foreign exchange related compliance issues, the Reserve Bank shall grant
an amnesty (pardon) to market participants that are committed to regularize
all anomalies with Exchange Control.

2.1
In terms of Section 38 of the Exchange Control Regulations, Statutory
Instrument 109 of 1996, which states that “Notwithstanding any other
provision of these regulations, an exchange control authority may issue a
direction exempting any person from any obligation imposed by or
prohibition contained in these regulations”, the Reserve Bank hereby grants
exemptions in the form of an amnesty to eligible market participants.

2.2
Under this framework, two categories of amnesty on Exchange Control
violations shall be granted with effect from 1 September 2014.

3.
Provisions for Absolute Amnesty

3.0. This category entails the complete exceptional reprieve of prior Exchange
Control violations. The pardon, which is subject to an approved eligibility
criteria, is permanent in that it completely strikes off the violation from the
Exchange Control register.

3.1. Absolute Amnesty Application Criteria

3.1.0 In order to implement an effective, fair and transparent Absolute Amnesty to
deserving applicants, the following framework shall apply:

(i)
Applications for Absolute Amnesty shall be submitted to
Exchange Control, through an Authorised Dealer, during the
period 1 September to 31 December 2014. Only applications
received by Exchange Control during this period, shall be
considered for Absolute Amnesty;

(ii)
Each application for Absolute Amnesty must be addressed to
the Director, Exchange Control and
clearly marked
“Application for Absolute Amnesty” and accompanied by an
Exchange Control Absolute Amnesty Declaration Form,
ECAAD (See Annexure 1).

(iii) The Authorised Dealer should clearly state the Category under
which the application is being submitted.

(iv)
The applicant and the Authorised Dealer shall justify the
application and attach supporting documentation, indicating the
relevant CD1 numbers;

(v)
The application should clearly state the total amount to be
granted Absolute Amnesty;

(vi)
Applications for Absolute Amnesty shall be assessed and
approved by the External Loans and Exchange Control Review
Committee; and

(vii) Exchange Control letters of approval for Absolute Amnesty
shall be issued by the Director, Exchange Control Division.

3.1.1 The following categories have been identified under the permanent
reprieve:-

(i)
Exporters with non-recoverable overdue export proceeds; and
(ii)
Machinery and equipment exported under repair and return, and
was declared obsolete.

3.2. Exporters with Non-Recoverable Overdue Export Proceeds

3.2.0. In terms of current policy, all export receipts should be repatriated into the
country within 90 days from the date of export or when contractually due,
and within any other period approved by Exchange Control. As at 30 June
2014, the total overdue export proceeds (Forms CD1/CD3/PTS1) amounted
to USD303.2 million. Of this amount, USD108.4 million accumulated
before January 2010 is not recoverable owing to the following reasons:

(i)
Some exporters engaged in unauthorised set offs of export
proceeds against value of imported goods;
(ii)
Some companies declared external receivables as bad debts
without seeking approval from Exchange Control;

(iii) Some consignees faced operational challenges and ended up
being closed or were liquidated;
(iv)
Some exporters relocated outside the country without notifying
Exchange Control; and
(v)
Some exporters who have been under sanctions had their export
proceeds seized by the US Department of the Treasury through
the Office of Foreign Assets Control (OFAC).

In this regard, all non-acquitted Forms CD1, CD3 and PTS1 raised prior
to 31 December 2010 (i.e. period under review), shall qualify for absolute
amnesty, under the following modalities:

3.2.1. Category 1: Forms CD1 Raised by Individual Cross-border Traders

(i) All Forms CD1 raised by Individual Cross-Border traders
registered under an individual‟s name shall be eligible for
acquittal using the amount declared on the respective Forms
CD1;
(ii) Authorised Dealers shall pre-acquit the relevant Forms CD1using
the declared amount in line with the application criteria in 3.1.
above; and
(iii) Exchange Control will carry out the final acquittal after approval
by the External Loans and Exchange Control Review Committee
(ELECRC).

3.2.2. Category 2: Exporters who cannot be traced by Authorised Dealer

(i) Where the Authorised Dealer has failed to locate the exporter, the
respective Authorised Dealers shall initiate an application
declaring that they followed up, failed to locate the exporter and
surrendered the exporter to Exchange Control;
(ii) The declaration by the bank should also show when the customer
last traded with the bank; and
(iii) After prudential assessment of the declaration and relevant
approvals granted, Exchange Control shall authorize the
respective bank to pre-acquit the relevant Forms CD1 before final
acquittal by Exchange Control.

3.2.3. Category 3: Overdue Export Receipts administered by Banks under
Curatorship

(i)
Export documentation raised with banks that were put under
curatorship or whose banking licenses were later cancelled
during the period under review shall be pre-acquitted and final
acquittal shall be done by Exchange Control after consultation
with the curator to establish eligibility.
3.2.4. Category 4: Exports not Under Contract of Sale

(i)
Exports not under Contracts of Sale refer to repair and return of
equipment
and
machinery,
gifts,
samples,
temporary
emigration, etc raised during the period under review shall be

eligible for acquittal after prudential assessment of the
application.
(ii)
An application by an Authorised Dealer under this category
should justify the granting of absolute amnesty.
(iii) The exporter shall make an appropriate declaration under Form
ECAAD.
3.2.5. Category 5: Unauthorised Set–Offs Against Export Proceeds

(i)
Under the prevailing Exchange Control requirements, exporters
are required to justify set-offs through seeking prior Exchange
Control approval and provide documentary evidence of
expenses incurred offshore;
(ii)
During the amnesty period, exporters who are eligible for
exemption under this category, and where documentary
evidence is not available, shall be required to declare under
Form ECAAD, the details of expenses and the payment
beneficiaries offshore which should tally with the un-acquitted
export proceeds;
3.2.6. Category 6: Exporters’ Declaration of Bad Debts

(i)
The current Exchange Control policy requires that no exporter
shall declare a bad debt on external receivables and acquit the
respective Forms CD 1 without prior Exchange Control
approval; and
(ii)
Under absolute amnesty, Exchange Control shall consider
applications for exceptional acquittal of the relevant Forms
CD1 linked to bad debts by the respective exporters.

(iii) In the event that the affected exporter cannot get acceptable
evidence from the external customer, this amnesty will allow
the exporter to submit a board resolution of debt write off to
allow consideration for exceptional acquittal of the overdue
export proceeds.
3.2.7. Category 7: Unauthorised Use of Export Proceeds to establish Crossborder Companies

(i)
Exporters that fall under this category shall submit applications
accompanied by a board resolution declaring and approving the
use of export proceeds to establish the cross-border investment.
(ii)
The respective Forms CD1 shall be eligible for acquittal after
prudential assessment of the application which will only be
approved on the strict understanding that the cross-border
investment shall be regularized with Exchange Control.
(iii) Final Exchange Control warning shall be issued to such
exporters.
3.2.8. Category 8: Exporters that have been placed under Sanctions

(i)
Exporters that fall under this category shall submit applications
to Exchange Control accompanied with documentary evidence
of such funds being seized.
(ii)
The respective Forms CD1 shall be eligible for “ring-fencing”
after prudential assessment of the application until the status of
the seized funds changes.

3.3. Exporters of Machinery and Equipment for Repair and Return

3.3.0 Companies raise Forms CD1 for export of machinery and equipment for
repair and return, which forms are normally acquitted upon submission of
Bills of Entry (Imports) as evidence of being returned into the country after
repair.

3.3.1 Authorised Dealers are advised that absolute amnesty are granted to
deserving cases of exported machinery and equipment for repair and return,
and later declared as obsolete.

3.3.2 Authorised Dealers shall require every deserving case for absolute amnesty
to submit the following information for consideration by Exchange Control;
i) Application letter by the exporter;
ii) Confirmation by the consignee that the machinery and equipment was
declared obsolete; and
iii) In the event that the information requested in (ii) above is not
available, a duly completed Exchange Control Declaration for
Absolute Amnesty (Form ECAAD).
4.
Provisions for Conditional Amnesty

4.0. Under this category, the affected parties are accorded a reprieve of 90 days
within which to regularise and make good the violation(s). The following
cases have been identified under this category:-

(i)
Exporters with recoverable overdue export proceeds;
(ii) Unauthorised external loans;
(iii) Unauthorised cross-border investments;
(iv) Non-repatriation of investment income; and
(v) Importers with outstanding Bills of Entry (Imports).
4.1. Exporters with Recoverable Overdue Export Proceeds

4.1.0 In this regard, all non-acquitted Forms CD1, CD3 and PTS1 raised after
1 January 2011 to date, shall qualify for conditional amnesty on the
following modalities:-

(a)
Under this category, exporters whose export receipts are
overdue, and categorised by Exchange Control as recoverable,
shall be granted conditional amnesty to regularise their overdue
positions within 90 days (1 September - 30 November 2014).

(b)
The applicable temporary reprieve on such exporters will be in
the form of a graduated relief on administrative penalties
currently
being
imposed
on
non-acquittals
of
export
documentation using the flagging criterion.

(c)
The following graduated administrative penalties shall apply
with effect from 1 September to 30 November 2014:

Table 1: Graduated Exchange Control Flagging for Exporters (1 Sept to 30 Nov 2014)
Number of days from date of
export or value of overdue
amount
Status
CEPECS
Flagging
Export Documentation Access
fee or penalty fee per Form
(USD)
Advance payment
Not Overdue
White

< or = 90
Not Overdue
Green

91 – 120
Overdue
Orange

121 – 180
Overdue
Red
USD30 or 1% of Export value
of the Form CD1 being raised,
whichever is greater
181 – 365 or overdue amount
between USD100 001 to
USD150 000
Overdue
Purple
USD75 or 2% of Export value
of the Form CD1 being raised,
whichever is greater
366 and above or more than
USD150 000
Overdue
Black
USD150 or 3% of Export value
of the Form CD1 being raised,
whichever is greater


4.1.1 As from 1 December 2014, after expiry of the conditional amnesty period,
the following Exchange Control Flagging Framework for Exporters shall
apply:

Table 2: Exchange Control Flagging Framework after Reprieve Period
Number of days from date of
export or value of overdue
amount
Status
CEPECS
Flagging
Export Documentation Access
fee or penalty fee per Form
(USD)
Advance payment
Not Overdue
White

< or = 90
Not Overdue
Green

91 – 120
Overdue
Orange
USD30 or 1% of the Export
value of the Form CD1 being
raised, whichever is greater
121 – 180 or overdue amount
between USD100 001 and
USD150 000
Overdue
Red
USD75 or 2% of Export value
of the Form CD1 being raised,
whichever is greater
181 – 365 or USD150 001 to
USD500 000
Overdue
Purple
USD150 or 3% of Export value
of the Form CD1 being raised,
whichever is greater
366 and above or more than
USD500 000
Overdue
Black
USD250 or 5% of Export value
of the Form CD1 being raised,
whichever is greater

4.2. Conditional Amnesty on Unauthorised External Loans

4.2.0. In order to facilitate a once off regularization exercise of such offshore
borrowings, Exchange Control is giving Authorised Dealers and their
clients, a 90 day conditional amnesty (1 September -30 November 2014)
within which all unregistered loans shall be submitted for regularization.

4.2.1. To facilitate the processing of such applications, applicants should furnish
the following information to Exchange Control;

a) Standard Term Sheet which spells out the loan amount, indicative terms of
interest rate and fees, the loan tenure, grace period, the purpose of external
loan and the proposed collateral security.
b) Loan agreement
c) Proof of receipt of loan funds in the form of inward telegraphic transfers
and/or Bills of Entry (Imports) evidencing receipt of equipment or goods
paid for by the lender on behalf of the borrower.
d) Status of the loan in terms of draw-downs, outstanding draw-downs, loan
balance and outstanding repayment.
4.3. Conditional Amnesty on Unauthorised Cross-border Investments

4.3.0. Exchange Control has observed that there are a number of outward foreign
direct investments into foreign markets, established by Zimbabwean
residents, that are not yet registered with Exchange Control.

4.3.1. In order to fully account for these cross-border investments, Exchange
Control is extending a 90 day conditional amnesty for the regularization of
all these businesses with Exchange Control.

4.3.2. In this regard, Authorised Dealers are advised to submit the following
information to Exchange Control to facilitate the regularization of the
investments;

i)
The name of the company and the country where the cross-border
investment was established;
ii)
Date of establishment of the cross-border investment;

iii)
Detailed ownership structure, including residential status of the
shareholders of the company;
iv)
The company‟s main business focus;
v)
The rationale for investing offshore as well as the company‟s focus on
the new proposed project;
vi)
The amount invested offshore;
vii)
A five year historical analysis of the company‟s operations;
viii) The performance and financial position of the cross-border investment as
well as the future plans of the investment;
ix)
Company‟s Board resolution sanctioning the investment.
4.4. Conditional Amnesty on Non Remittance of Investment Income

4.4.0. In terms of Previous policy, dividends, technical fees and management fees
declared by a cross-border venture in favour of the parent company in
Zimbabwe, are expected to be repatriated back home as and when they are
due. Where the initial capital outlay for a cross-border investment was
funded from foreign currency sourced from the local market, dividend
income, technical fees and management fees remitted into Zimbabwe shall
first payback the initial amount within a period of four (4) years from the
inception of the cross-border investment.

4.4.1. Exchange Control has noted with concern that cross-border ventures
continue to delay the repatriation of such income beyond the first four years
of their operations offshore.

4.4.2. In order to fully account for the income generated by cross-border
investments, all companies with approved cross-border investments are
hereby granted a 90 day reprieve to submit the quarterly declaration of

financial reports and investment income in the form of declared dividends to
Zimbabwe. Companies whose fund have been affected by sanctions and
have had their funds frozen under OFAC, shall be granted an indefinite
reprieve, until such funds have been freed.
4.5. Importers with Outstanding Bills of Entry (Imports)

4.5.0. In terms of Exchange Control policy, imports of goods paid for in advance
and those under credit terms, are required to be acquitted in CEBAS within
90 days of payment, on submission of the relevant Bills of Entry (Imports).

4.5.1. Under conditional amnesty, those importers who had not discharged their
Bills of Entry (Imports) as at 30 June 2014 shall be granted a reprieve to
regularize their position within the amnesty period of 1 September 2014 to
30 November 2014.

4.5.2. In the event that the importer cannot avail the requisite Bills of Entry
(Imports), the Chief Executive Officer of the importing company, shall be
required to obtain a Board Resolution confirming that a Bill of Entry
(Imports) is not available and that the imports paid through the Authorised
Dealer were received into the country. Such a declaration by the company
shall be made on the Exchange Control No-Bills of Entry Declaration
Form (Form ECOBED). (See Annexure 2).

4.5.3. In instances where there were no imports being sourced, the funds
externalized should be repatriated back to Zimbabwe during this amnesty
period. Exchange Control will accordingly acquit import payments where
there are no corresponding Bills of Entry (Imports) and where documentary
evidence of the return of funds into the importer‟s account has been

confirmed and certified by Exchange Control through the importer‟s
Authorised Dealer.

4.5.4. Authorised Dealers are advised that where the importer fails to account for
outstanding Bills of Entry (Imports) after the amnesty period, such cases
shall be referred for possible prosecution.


4.5.5. After the expiry of this 90 day moratorium, non compliance will attract
an administrative penalty levied on the importer of 1% of the
outstanding value of outstanding Bills of Entry (Imports) every time the
importer wants to make a payment for imports.

4.5.6. Authorised Dealers shall use the CEBAS flagging framework to establish
the status of the importer prior to effecting payment. As shown in the
flagging framework hereunder, which shall become applicable from 1
December 2014, an importer flagged green shall make import payments
without any penalty and an importer flagged red shall be required to pay the
applicable levy.

Table 3: Exchange Control Flagging of Corporate Importers
Number of days from
date of payment
Status
CEBAS
Flagging
Penalty
fee
per
Payment
(USD)
< or = 90
Not Overdue
Green

Nil

Over 90 days
Overdue
Red
1% of the value of the
outstanding Bill(s) Of Entry
(Imports)

4.5.7. The CEBAS system will be reconfigured to accommodate this new flagging
framework. In this regard, Authorised Dealers shall be required to register
all their importing corporate clients with effect from 1 October 2014 to 30
November 2014, using an online template on the CEBAS system.

4.5.8. In order to operationalise these measures, Authorised Dealers are advised to
collect these penalties from each importer and on a weekly basis and make
direct transfers to the Reserve Bank Head Office Account through the RTGS
system every Monday by 1200hrs, for charges collected for the previous
week.

4.5.9. Furthermore, Authorised Dealers are advised that where corporates use
credit cards to effect payments, such payments must be reported and
acquitted on CEBAS, in line with the new dispensation.

4.5.10. Authorised Dealers are advised that Exchange Control Directive RM80
dated 1 August 2011, clause 6.1, which required Authorised Dealers to
upload payments on CEBAS within 24 hours of effecting payment, remains
applicable.

5.
Cases Not Eligible for Amnesty

5.0. Authorised Dealers are advised that the following cases shall not qualify
for exceptional acquittal under the amnesty:-
(i)
Forms CD1 for export of machinery and equipment that are still under
repair;

(ii)
Forms CD1 for export of machinery and equipment under contracts
that are still in force; and
(iii) Forms CD1/CD3/PTS1 for cases which are currently being
investigated for possible externalization by the responsible
authorities as well as cases that are pending before the Courts of
Law.
6.
Registration of Service Agreements and Acquittal of Service Payments

6.0
In order to curb externalization of foreign currency through transfer pricing
in the payment for foreign services that have not been provided and overpricing of foreign services, Authorised Dealers are advised that with effect
from 1 September 2014, Exchange Control shall conduct on-site and off-site
validation of all payments for foreign services by local corporates.

6.1
Authorised Dealers are advised that with effect from 1 September 2014,
Exchange Control shall introduce a new accounting system to cater for the
payment for foreign services by local corporates. In this regard, the CEBAS
system shall be reconfigured to cater for acquittal of payments for foreign
services through the submission of an Exchange Control Service Payments
Declaration Form (ECSPAD) which is consistent with the Service
Agreement registered with Exchange Control. (See Annexure 3).

6.2
Form ECSPAD shall be evidence that the service has been rendered and
appropriate remuneration paid.

7.
Review of Nostro Account Balances Threshold

7.0
Previously, Authorised Dealers were required to maintain a maximum of
30% of their Foreign Currency Account (FCA) balances which exclude
domestic FCA balances in Nostro Accounts to meet their clients‟ day to
day international payment obligations.

7.1
In order to enhance and sustain the gains achieved by the policy on
improving market liquidity and to simplify the method of calculating the
compliance threshold, with immediate effect, the maximum Nostro
Account compliance threshold is reviewed from the previous 30% of
FCA balances excluding domestic FCAs, to a simplified threshold of 5%
of total FCA balances (total bank deposits).

7.2
Authorised Dealers shall be allowed the normal 48-hour adjustment period
in the event that account movements result in them exceeding the maximum
threshold.

7.3
Exchange Control shall continue to monitor Authorised Dealers‟ Nostro
Account movements through the Computerised Exchange Control Nostro
Accounts Monitoring System (CENAMS). In order to enhance the
monitoring and accounting framework for Nostro Accounts, the second
phase of CENAMS shall be implemented with effect from 1 October 2014.

7.4
Exchange Control shall levy an administrative penalty of 2.5% of the excess
balances after the expiry of the 48-hour adjustment period. These penalties

shall be automatically calculated through CENAMS and Authorised Dealers
shall be debited accordingly. Authorised Dealers should ensure that
payments of debited amounts are transferred to the Reserve Bank within 48
hours.

7.5
Genuine cases where the payment requirements from Nostro Account may
result in the Authorised Dealer exceeding the Exchange Control 5%
threshold on Nostro Account balances, the Authorised Dealer shall be
allowed to request, the Director, Financial Markets Division to transfer the
required excess amount from their RTGS holding at the Reserve Bank to
their Nostro Account. These adjustments will not require prior Exchange
Control approval. It remains the Authorised Dealer’s responsibility to
ensure that the 5% threshold on the Nostro Account is adhered to at all
times.
8.
Limit of Foreign Currency Cash Holdings by Authorised Dealers

8.0
The Reserve Bank noted with concern the increased abuse of cash by market
players and as part of its mandate to fight against money laundering; it is
expected to closely monitor the movement of cash.

8.1
In order to avoid this abuse by market players and to comply with antimoney laundering measures, total cash holdings of each Authorised Dealer
shall not exceed 15% of total FCA balances (total bank deposits) with effect
from 1 September 2014. Similarly, Authorised Dealers shall be allowed a
48-hour adjustment period.

8.2
Exchange Control shall levy an administrative penalty of 2.5% of the excess
cash holdings after the 48-hour adjustment period. These penalties shall be

automatically calculated through CENAMS and Authorised Dealers shall be
debited accordingly. Authorised Dealers should ensure that payments of
debited amounts are transferred to the Reserve Bank within 48 hours.

8.3
In terms Exchange Control Directive RM80 dated 1 August 2011,
Authorised Dealers were required to seek prior Exchange Control approval
for the exportation of foreign currency cash, including soiled notes. With
immediate effect, Authorised Dealers are advised that the exportation of
foreign currency cash, including soiled notes no longer requires prior
Exchange Control approval. However, the audit process of all cash
repatriations by banks, remains the same.

8.4
In this regard, all cash repatriations shall be witnessed by the Authorised
Dealer‟s Internal Audit/Risk Departments.

8.5
Authorised Dealers shall therefore submit names of staff from Risk and
Internal Audit Departments who will be responsible for overseeing the cash
repatriation process for Exchange Control designation and training.

8.6
Authorised Dealers must within 24hours, submit copy of insurance showing
value exported and an Airway Bill. Authorised Dealers shall continue to
submit Nostro Account statements to Exchange Control within 14 days of
cash export.

8.7
The relaxation of controls on both importation and exportation of
foreign currency cash will allow the Authorised Dealers to have
flexibility in funding their cash holdings and adhering to the Exchange
Control 15% cash holding limit with ease. (See Section 8 below).

8.8
Exchange Control will work closely with Bank Use Promotion and
Suppression of Money Laundering Unit to monitor adherence to the
aforementioned Exchange Control provisions.
9.
Importation of Foreign Currency Notes and Coins by Banks

9.0. Following the introduction of the Exchange Control Compliance Rating
Systems (EXCORS), Authorised Dealers have significantly demonstrated
improved compliance status. In this regard, with immediate effect,
Authorised Dealers shall be allowed to import foreign currency notes and
coins from their Nostro Accounts without prior Exchange Control approval.

9.1. However, Authorised Dealers shall be required to submit returns to
Exchange Control in the form of Nostro Account Statements confirming
deduction of the imported cash and the relevant Airway Bill, within 7 days
of importation of foreign currency notes and/or coins.

9.2. Authorised Dealers are advised that the CEBAS system shall be
reconfigured accordingly, to allow reporting of all cash imports by
Authorised Dealers and submission of relevant returns upon receipt of the
foreign currency cash in Zimbabwe.

9.3. The importation of cash by banks should take into account the Exchange
Control provisions regarding the 15% threshold of cash holding by
Authorised Dealers. (See paragraph 8.1 above).

10.
Limits on Export of Foreign Currency Cash by Individuals


10.0. In order to comply with the international anti-money laundering measures
and consistent with other regional countries‟ limits on export of cash and the
need to promote the use of plastic money, the limit on export of cash on
person or in baggage has, with effect from 26 August 2014, been reduced
from US$10,000 to US$5,000 per exit.

10.1. Authorised Dealers are advised to seek prior Exchange Control approval,
where there is justification for an individual to export foreign currency cash
more than the stipulated limit.

10.2. The Zimbabwe Revenue Authority (ZIMRA) shall implement this policy in
terms of the Exchange Control Regulations, Statutory Instrument 109 of
1996.

11.
Review of External Loans Approval Limit

11.0. Previous Exchange Control policy stated that all external loans of USD1
million and above required prior External Loans Coordinating Committee
(ELECRC) approval, while external loans below USD1 million were
approved at the Authorised Dealers‟ level.

11.1. Following the improved compliance levels by Authorised Dealers after the
implementation of EXCORS and given the need to streamline the approval
processes and enhance the timeous accessing of offshore finance by the

productive sector, Authorised Dealers are hereby advised that the
approval limit of external loans and/or trade credits has been reviewed
upwards from USD1million to USD7.5 million with immediate effect.

11.2. All external loans and/or trade credits below USD7.5 million and whose
terms are consistent with Exchange Control Guidelines on External
Borrowings (ECGEB) (See Annexure 4), shall be processed and granted
formal approval at Authorised Dealer Level and assigned a reference code
(BANKCODE/EL00NO/WEEK-MONTH-YEAR)
and
registered
with
Exchange Control weekly through EC Form 2L. This form shall now be
submitted by 1000hrs every Monday, registering External Loan Transactions
for the previous week. (See Annexure 5)

11.3. All external private or public loans exceeding USD7.5 million shall require
approval from the External Loans and Exchange Control Review Committee
(ELECRC) approval.

11.4. All other reporting and administrative procedures remain unchanged.

12.
Foreign Investment Promotion Facilitation

12.1 External Loans and Exchange Control Review Committee (ELECRC)

12.1.0 In order to ensure efficient and effective service delivery to foreign investors
by creating an expeditious and market friendly processing framework for
investment related applications/requests, all applications pertaining to the
contraction of external debt shall be submitted to Exchange Control Division

for consideration by the consolidated and synchronised External Loans and
Exchange Control Review Committee (ELECRC).

12.1.1 All applications for foreign investment (debt and equity), shall be addressed
to:
The Director
Exchange Control Division
Reserve Bank of Zimbabwe
80 Samora Machel Avenue
P. O. Box 1283
Harare

12.2
Authorized Dealers are reminded to ensure that all foreign investments
and debt related applications submitted to Exchange Control for
consideration fully meet the minimum information requirements given in
these Exchange Control Guidelines. Furthermore, where additional
information has been requested by Exchange Control to support the
application, such information shall be submitted to Exchange Control
within seven (7) working days of the request. Failure of which, the
application shall be removed from the pending list and the Authorized
Dealer shall be required to resubmit the application as a new request.

12.3
Authorized Dealers are further advised that all foreign investment and
debt related applications submitted for consideration by ELECRC shall
have a normal processing period of not more than seven (7) working days.
However, special accommodation to expedite urgent applications,
especially those that relate to capital inflows shall always be considered.

12.4
Participation by Foreign Investors on the Bond Market

12.4.0 In terms of previous policy on investment, in the bond market, foreign
investors could subscribe up to 35% of primary issue of bonds. The same
policy also prohibited foreign investors from making purchases from the
secondary market.

12.4.1 In order to promote investment by foreign investors in the bond market,
with immediate effect, foreign investors are now permitted to freely
invest up to 100% of the bond issue. Authorised Dealers are required to
ensure that the purchase of the bonds is financed by inward transfer of
funds through normal banking channels, under advice to Exchange
Control.

12.4.2 Furthermore, foreign investors are now permitted to make purchases of
bonds on the secondary market, without any restrictions.

12.5
Removal of Restrictions on Capital Remittances

12.5.0 In terms of previous Exchange Control policy on capital remittances, all
disinvestment proceeds arising from pre-May 1993 investments and
required prior Exchange Control approval, were eligible for re-investment
on the domestic market for a period of five (5) years prior to remittance.

12.5.1 Authorised Dealers are advised that in line with the phased and gradual
liberalization framework, with immediate effect, all disinvestment
proceeds shall now be 100% remittable after prior approval by
Exchange Control.

12.5.2 To facilitate the processing of such proposals the following details must
be furnished to Exchange Control with the application:-

i.
The date when the investment was undertaken;
ii.
The disinvesting company‟s registration documents, as well as the
liquidation and distribution account from a reputable firm of auditors;
iii.
Details on how the foreign investment was funded originally as well
as documentary evidence of the receipt of the funds in foreign
currency through normal banking channels;
iv.
Latest audited financial statements;
v.
Justification of valuation methods used to deduce the share disposal
value,
vi.
A valuation certificate from a reputable independent valuator, in case
where the initial investment was in the form of physical assets;
vii.
A sale agreement, where the disinvestment is by way of sale of shares,
giving full names of the buyer(s) and their respective residential
status.
viii.
Indication whether the shares (if any) are being disposed at par,
premium or at a discount1.

12.5.3 Investors may remit the initial capital outlay plus appreciation after
Exchange Control approval has been granted.


1 In cases where share disposal is to a local, the minimum requirement is that the shares be disposed at par or at a
discount.

12.5.4 In this regard, Authorised Dealers are no longer required to open blocked
accounts on behalf of the foreign investors‟ remittances.

12.5.5 Furthermore, Exchange Control advises that Authorised Dealers are also
no longer required to maintain blocked accounts on behalf of emigrants
for depositing pension remittances. All current pension remittances shall
be eligible for immediate remittance to the beneficiary.

12.6
Participation by Non-Resident Zimbabweans on the ZSE

12.6.0 Previous policy provided that Zimbabweans in the Diaspora could invest
on the Zimbabwe Stock Exchange up to 70% per counter compared to the
40% limit applicable to foreign investors.

12.6.1 In recognition of the critical role that international remittances play in the
development of developing countries and to allow Zimbabweans in the
Diaspora to fully participate in Zimbabwe‟s economic development,
Authorised Dealers are hereby advised that the threshold for investment
by Zimbabweans in the diaspora on the Zimbabwe Stock Exchange has
been reviewed upward from 70% to 100%.

12.6.2 In order to ensure full accounting of foreign currency receipts from
investments on the ZSE, the Transfer Secretaries shall ensure that the
buyer exhibits evidence of receipt of funds through normal banking
channels, prior to transfer of the security to the Zimbabwean in the
diaspora and endorsement of Non-Resident status.

12.6.3 Disinvestment proceeds emanating from the sale of the shares, dividends,
profits and capital appreciation shall be 100% remittable upon submission
of the following documentation to the Authorised Dealer:

(i) Documentary evidence of inward transfer of funds for the initial
investment.
(ii) Copy of the Share Certificate.
(iii) Instruction from the investor to the Stockbroker ordering the
disinvestment.
(iv) Documentary evidence of payment of all statutory obligations such
as capital gains and other taxes levied on sales of shares in
Zimbabwe.
12.6.4 These requirements are applicable to both non-resident Zimbabweans and
foreign investors disinvesting from the ZSE.
12.7
Promotion of Multi-National or Cross-Border Investments

12.7.0 In order to facilitate investments by locally incorporated entities aspiring
to establish cross-border investments, list on external bourses or establish
offshore holding companies (multi-national corporations) owning local
assets, the following information shall be submitted to Exchange Control
with the application for consideration;
12.7.1 Cross-Border Investments

12.7.1.1 This relates to outward foreign direct investment by Zimbabwean
residents into foreign or offshore markets. Cross-border investments can
be in the form of the establishment of offshore branches or subsidiaries,
marketing offices, joint ventures. All cross-border investment proposals

require prior Exchange Control approval, where consideration shall be on
a case by case basis.

12.7.1.2 The following information must be submitted to Exchange Control with
the application for cross-border investment:-
i)
The name of the company investing offshore;
ii)
Detailed ownership structure, including residential status of the
shareholders of the company;
iii)
The company‟s local and foreign business focus;
iv)
The rationale for investing offshore as well as the company‟s
focus on the new proposed project;
v)
The initial capital requirement, i.e. purchase consideration or
payment terms (source of funding);
vi)
Audited financial statements including the latest covering five
(5) years where applicable;
vii)
In the absence of audited financial statements, especially, for
startup companies or small to medium enterprises, management
accounts may be considered;
viii) Export track record where applicable, supported by suitable
documentary evidence;
ix)
A five-year cash-flow projection, clearly showing the
investments anticipated, annual turnover, total costs, net profits,
dividends and other income accruing to Zimbabwe from the
cross-border investment;
x)
Board resolution supporting the cross-border investment
proposal;

xi)
Other regulatory approvals where applicable depending on the
sector in which the company operates in.

12.7.1.3 Once the cross-border proposal is considered and approved by the
ELECRC, the Authorised Dealer and the local company is required to sign
an Exchange Control Undertaking2 to abide by the terms and conditions
of approval which include, but not limited to;
i)
Submission to Exchange Control of quarterly performance
reports of the approved cross-border investment.
ii)
Submission to Exchange Control of annual audited statements
for the cross-border investment.
iii)
Remittance to Zimbabwe, of income realized from the crossborder investment in the form of dividends, profits or
management fees. The remittances should be supported by
relevant copies of telegraphic transfers confirming receipt of
funds into the country.
iv)
On-site visits to the cross-border investment by Exchange
Control officials, with the objective of assessing the operations
of the cross-border investment.
v)
The Authorised Dealer‟s commitment to administer the terms
and conditions of approval to ensure the client‟s compliance.
12.7.2 Listing on External Stock Exchanges (Bourses)

12.7.2.1 In order to improve liquidity in the economy, Exchange Control is
currently considering proposals by local companies seeking to have a
primary or secondary listing on an offshore stock exchange. In

2 The Exchange Control Undertaking is customized by Exchange Control taking into account the terms and
conditions for approval.

considering such proposals, Exchange Control shall pay special attention
to the following requirements;
i)
The level of compliance by the company with indigenization
regulations and any other statutory requirements.
ii)
The amount of money which the local company intends to raise
on an external stock exchange.
iii)
Application or utilisation of the funds to be raised on an
external stock exchange in Zimbabwe.
iv)
For local entities intending to have a primary listing offshore,
concrete plans and timelines indicating when the local company
intends to have a secondary listing on the Zimbabwe Stock
Exchange (ZSE).

12.7.2.2 Incorporating the abovementioned key considerations, local entities
aspiring to list on an external stock exchange should submit and meet the
following minimum requirements;
i)
Company profile which should clearly specify the nature of
operations and existing shareholders and their residential status.
ii)
Audited financial statements including the latest, covering a
period of five (5) years.
iii)
Management accounts may be considered for startup
companies.
iv)
Draft or final Prospectus for offshore listing, clearly
highlighting among other issues, the quantity of shares to be
listed offshore, share price, listing expenses and amount to be
raised offshore.

v)
Where the investment is not through an Initial Public Offer
(IPO), details of investment acquisition/mergers or share swaps.
vi)
Board resolution supporting the primary or secondary listing
offshore.
vii)
A copy of the approved indigenization plan by the Ministry of
Youth, Indigenisation and Economic Empowerment.
viii) For local companies intending to have a primary listing
offshore, a concrete road map with timelines indicating when a
secondary listing will take place on the ZSE.

12.7.2.3 Once the offshore listing proposal is considered and approved by the
ELECRC, the Authorised Dealer and the local company is required to sign
an Exchange Control Undertaking to abide by the terms and conditions
of approval which include, but not limited to;
i)
At any given time, the shareholding of indigenous investors
shall not go below 51% unless Authorised by Exchange Control
and the Ministry of Youth, Indigenisation and Economic
Empowerment.
ii)
Submission to Exchange Control of quarterly share trading
performance of the listed company and a list of all shareholders
showing residential status and percentage shareholding at the
end of each reporting period.
iii)
Submission to Exchange Control of annual audited statements
for the local company.
iv)
Remittance to Zimbabwe of capital raised from initial offshore
listing and disposal of shares by individual investors. The
remittances should be supported by relevant copies of

telegraphic transfers confirming receipt of funds into the
country.
v)
The Authorised Dealer‟s commitment to administer the terms
and conditions of approval to ensure the client‟s compliance.

12.7.3
Establishment of Offshore Companies Owning Local Assets

12.7.3.1
In order to militate against perceived risk leveled against the country
by some foreign investors and to mobilize offshore funding for local
use in a sustainable manner, Exchange Control shall consider
proposals by local companies wishing to establish offshore companies
through share swaps.

12.7.3.2
Such applications shall be accompanied by the following information
for consideration by Exchange Control;

i)
Company profile of the entity establishing an offshore holding
company;
ii)
Detailed ownership structure, including residential status of the
shareholders of the company;
iii)
The rationale for establishing an offshore holding company;
iv)
Basis of share swap where establishment is through a reverse
takeover or share swap;
v)
The intended methodology of mobilizing capital offshore ie
through equity or debt instruments;
vi)
The targeted amount to be raised and its application to support
local operations;

vii)
Audited financial statements including the latest covering five
(5) years where applicable;
viii) In the absence of audited financial statements especially for
startup companies or small to medium enterprises, management
accounts may be considered;
ix)
Board resolution supporting the offshore structure;
x)
Approval letter for the proposed offshore structure by the
Ministry
of
Youth,
Indigenisation
and
Economic
Empowerment;
xi)
Other regulatory approvals where applicable, depending on the
sector in which the company operates in.

12.7.3.3
Once the offshore investment structure has been considered and
approved by the ELECRC, the Authorised Dealer and the local
company shall be required to sign an Exchange Control
Undertaking to abide by the terms and conditions of approval which
include, but not limited to;

i)
At any given time, the shareholding of indigenous investors
shall not go below 51% unless Authorised by Exchange Control
and the Ministry of Youth, Indigenisation and Economic
Empowerment.
ii)
Submission to Exchange Control of quarterly performance
reports of the offshore investment structure.
iii)
Submission to Exchange Control of annual audited statements
or latest management accounts for the local company.

iv)
Commitment that all funds to be raised offshore shall be
repatriated to Zimbabwe for local utilisation and that supporting
documentary evidence in the form of copies of telegraphic
transfers confirming receipt of funds into the country will be
availed to Exchange Control.
v)
The Authorised Dealer‟s commitment to administer the terms
and conditions of approval to ensure the client‟s compliance.

12.7.4
Enhanced Compliance Monitoring of Cross-Border Investments

12.7.4.1
Authorised Dealers are advised that while the Reserve Bank supports
investments that create Zimbabwean offshore companies and have a
potential to yield quick and long-term gains to the country, the key
success of these investments is the promotion of discipline by local
investors.

12.7.4.2
Exchange Control shall give priority for consideration of offshore
investment applications that have limited foreign currency cash
repatriation as initial capital outlay.

12.7.4.3
Exchange Control will enhance its monitoring framework for these
approved investments, and Authorised Dealers shall ensure the timely
remittance of investment income in the form of profits, dividends and
other income earnings back into the country. Exchange Control‟s
monitoring framework will require periodic reporting and carrying out
of on-site audits and visits, at the expense of the applicant, to verify
reported investments and performance.

13.
Purchase of Immoveable Property

13.1 In terms of previous Exchange Control policy, the purchase of property by
foreign individuals and foreign corporate bodies formed the basis of specific
applications to be lodged with Exchange Control.

13.2 In order to attract new investments into the immovable property sector
by foreigners, with immediate effect, individuals with external financial
resources (local and foreign residents)3 are now allowed to freely invest
in the property market through purchase of residential buildings
without seeking Exchange Control approval.

13.3 Authorised Dealers are, therefore, required to ensure that all purchases of
property by individuals with external financial resources are registered with
Exchange Control within 14 days of transfer of property between the
transacting parties.

13.4 The ex-post registration of investments into the property market by
individuals with external financial resources, shall be accompanied by the
following documentation;
i. Copy of sale agreement duly signed by the seller and purchaser or
their nominees.
ii. Proof of inward receipt of funds from outside supported by copies of
telegraphic transfers.
iii. Documentary evidence confirming payment of Capital Gains tax due
to Zimbabwe Revenue Authority (ZIMRA).

3 Local and foreign residents refers to non-resident Zimbabweans, resident Zimbabweans with offshore funds and
foreign residents who are non-Zimbabwean and are using offshore funds to buy property in Zimbabwe.

iv. Purpose of acquisition (whether for investment purposes or personal
occupation).
14.
Disposal and Remittance of Immovable Property Proceeds

14.0 Exchange Control regulations require specific applications to be made to
Exchange Control for the remittance of proceeds arising from disposal of
immovable property. In order to protect the Capital Account, as well as
allowing property owners to make use of their sale proceeds in a manner that
enhances liquidity in the market, the following shall apply:-

14.1 Property Acquired Using Offshore Funds

14.1.1 The remittance of the proceeds emanating from disposal of immovable
property purchased by individuals with external financial resources shall be
handled by Authorised Dealers who should ensure that the applicant
furnishes the Authorised Dealer with the following documents prior to
remittance of sale proceeds;

i. Proof of inward receipt of funds from outside as supported by copies
of telegraphic transfers which were initially used to purchase the
property.
ii. Documentary evidence confirming payment of Capital Gains tax due
to Zimbabwe Revenue Authority (ZIMRA).
iii. Copy of sale agreement duly signed by the seller and purchaser or
their nominees.
iv. Exchange Control authority under which the initial purchase was
registered ex-post.

14.2 Property Acquired Using Local Funds

14.2.1 The remittance of the proceeds emanating from disposal of immovable
property purchased by individuals using local financial resources shall be
submitted to Exchange Control for consideration.

14.2.2 For emigrating individuals, Authorised Dealers are required to furnish
Exchange Control with the following information;
i. Completed Form „A‟ Emigration clearly indicating the properties
currently owned by the emigrant and/or bank balances related to
property sale proceeds.
ii. Copy of sale agreement duly signed by the seller and purchaser or
their nominees.
iii. Documentary evidence confirming payment of Capital Gains tax due
to Zimbabwe Revenue Authority (ZIMRA).

14.2.3 For non-resident individuals who are beneficiaries of deceased estates, the
Authorised Dealers should ensure that the following information should
accompany the application to Exchange Control;
i. Copy of the will.
ii. Final liquidation and distribution account.
iii. Copy of the sale agreement.
iv. Proof of settlement of Capital Gains tax due to ZIMRA.
v. Application letter by the estate beneficiary clearly indicating
residential status and banking details.
vi. Any supporting documents from estates administrators.

14.3 Remittance of Rental Income

14.3.1 Rentals due to non-resident individuals who formally acquired immovable
property are freely remittable provided a signed copy of the lease agreement
is lodged with the bank.

14.3.2 Rentals due to non-resident Zimbabweans (Diaspora) are also freely
remittable provided a signed copy of the lease agreement is lodged with the
bank.

Exchange Control Compliance and Renewal of Authorised Dealership
Licences

15.0 The liberalization of the current account has seen an increase in Exchange
Control transactions at branch level. Consequently, the compliance
framework requires renewal of Authorised Dealership licences on an annual
basis.

15.1 The new compliance monitoring framework is also being automated to apply
best practices. Hence, Exchange Control‟s capacity building programme will
be intensified to build the necessary competencies in Exchange Control
operations.

15.2 In this regard, and pursuant to the new Authorised Dealers licencing
framework, the licensing fees have been reviewed from the current $400.00
as follows;
• Head Office USD 1, 000 per annum
• Branch USD 500 per branch per annum

15.3 Authorised Dealers are therefore advised that following the completion of
the Compliance Ratings for end-July 2014, communication to Authorised
Dealers by Exchange Control, representations made by Authorised Dealers
to Exchange Control, the Reserve Bank shall now issue renewal letters and
Authorised Dealership Licences for the period 1 September 2014 to 31
August 2015.

15.4 The Reserve Bank urges banks to exercise extreme caution in the conduct of
cross-border transactions, and apply as much as possible, the KYC principle,
in order to ensure adherence to the existing Exchange Control framework.


EXCHANGE CONTROL DIVISION
RESERVE BANK OF ZIMBABWE
1 SEPTEMBER 2014

EXCHANGE CONTROL ABSOLUTE AMNESTY DECLARATION FORM


Date

To:
The Director, Exchange Control Division, 80 Samora Machel Avenue, Harare
Name of Authorised Dealer (Bank)
Name of the Exporter

Exporter’s CEPECS’ Registration
Number

Total Amount to be Considered
for Amnesty (USD)

Category of the Amnesty in terms
of Exchange Control Directive
RP141 dated 1 September 2014

List of Supporting Documentation
Attached e.g.:

(a) Application letter by the
exporter;
(b) Previous correspondence on
the matter;
(c) Board
of
Director’s
Resolution


Declaration by
the
Exporter
Representative
who should be
at the level of
the
Chief
Executive
Officer

Full Name & ID


Designation/Job
Title


Signature


Information
Verified by
Authorised
Dealer (KYC)
Full Name &
Designation


Signature

This declaration is made in compliance with the provisions of Section 41 of the Exchange Control Regulations,
Statutory Instrument 109 of 1996. I acknowledge that providing false information is a breach of Paragraph (b) of
subsection (1) of Section 5 of the Exchange Control Act [Chapter 22.05] and doing so will render me liable to
prosecution under the Act.
Annexure 1: Form ECAAD

EXCHANGE CONTROL NO-BILL OF ENTRY DECLARATION FORM


Date

To:
The Director, Exchange Control Division, 80 Samora Machel Avenue, Harare
Name of Authorised Dealer (Bank)

Name of the Importer (Goods)

Date of Payment for Imports

Total Amount Paid for Goods
(USD)


Board
Resolution
attached
confirming receipt of imported
goods and value of imports by the
company.


Declaration
by
the
Chief
Executive
Officer

Full Name &
ID


Designation/Job
Title


Signature


Information
Verified by
Authorised
Dealer (KYC)

Full Name &
Designation


Signature

This declaration is made in compliance with the provisions of Section 41 of the Exchange Control Regulations,
Statutory Instrument 109 of 1996. I acknowledge that providing false information is a breach of Paragraph (b) of
subsection (1) of Section 5 of the Exchange Control Act [Chapter 22.05] and doing so will render me liable to
prosecution under the Act.


Annexure 2: Form ECBED

EXCHANGE CONTROL SERVICE PAYMENTS DECLARATION FORM


Date

To:
The Director, Exchange Control Division, 80 Samora Machel Avenue, Harare
Name of Authorised Dealer (Bank)
Name of the Importer (Services)

Service
Agreement
Exchange
Control Registration Number &
Date

Total Amount Paid for Services
Rendered (USD)

List of Supporting Documentation
Attached e.g.:

(a) Invoice
from
Service
Provider showing nature of
work done;
(b) Proof
of
Payment
of
Withholding Tax to ZIMRA


Declaration by
the
Importer
Representative
who should be
at the level of
the
Chief
Executive
Officer/Finance
Director

Full Name & ID


Designation/Job
Title


Signature


Information
Verified by
Authorised
Dealer (KYC)

Full Name &
Designation


Signature

This declaration is made in compliance with the provisions of Section 41 of the Exchange Control Regulations,
Statutory Instrument 109 of 1996. I acknowledge that providing false information is a breach of Paragraph (b) of
subsection (1) of Section 5 of the Exchange Control Act [Chapter 22.05] and doing so will render me liable to
prosecution under the Act.
Annexure 3: Form ECSPAD

EXCHANGE CONTROL GUIDELINES FOR EXTERNAL BORROWING

ON APPLICATIONS SUBMITTED TO

THE EXTERNAL LOANS AND

EXCHANGE CONTROL REVIEW COMMITTEE (ELECRC)


EXCHANGE CONTROL DIVISION

1 September 2014

Annexure 4: ECGEB

RESERVE BANK
MINISTRY OF
OF ZIMBABWE
FINANCE


EXTERNAL LOANS AND EXCHANGE CONTROL
REVIEW COMMITTEE (ELERCC)


TERMS OF REFERENCE AND GUIDELINES

EXTERNAL LOANS AND EXCHANGE CONTROL REVIEW COMMITTEE
(ELECRC) TERMS AND GUIDELINES

The following ELECRC Terms of Reference and Guidelines are intended for use
by Authorised Dealers, Corporates and General Public when applying for offshore
loans approval. The guidelines will be amended whenever necessary through the
replacement of the relevant items.

Any enquiries relating to these Terms of Reference and Guidelines should be
addressed to:

The Director
Exchange Control Division
Reserve Bank of Zimbabwe
80 Samora Machel Avenue
P O Box 1283
Harare

Tel: 263-4-703000/111

PREAMBLE
1.1
External debt management is an integral part of macro-economic
management in Zimbabwe, which is based on the need to ensure that
national external borrowings are sustainable. The country should be able to
service its debt without defaulting or rescheduling.

1.2
The central element of external debt management is to maintain a
sustainable level of external debt servicing and control the types and
amounts of foreign borrowing.
1.3
Thus, the task of the external debt manager is to examine whether the debt
sustainability ratios are consistent with the country‟s economic and financial
situation. This is against the background that external debt policy affects not
only the balance of payments and budget but also the overall macroeconomic planning. The decisions of the ELECRC should, therefore, be
consistent with the macro-economic framework at any particular point in
time.

OBJECTIVES OF ELECRC
2.1
The main objectives of the ELECRC include:
i.
Ensuring that the overall external debt sustainability is maintained;
ii.
Ensuring that external debt is raised, managed and retired at the
lowest possible cost, consistent with the country‟s economic and
financial situation;
iii.
Monitoring the country‟s level of indebtedness;
iv.
Analysing and reviewing the country‟s risk exposure;
v.
Raising awareness on looming debt problems.
2.2
Furthermore, ELECRC should:
i.
Implement an effective debt management policy by sanctioning
and monitoring all new loan commitments undertaken by all
sectors of the economy.

ii.
Input into the external debt policy formulation and debt strategy.
iii.
Ensure that external borrowings are within the absorptive capacity
of the economy and that the external debt portfolio is optimized.
iv.
Create a need for a disciplined process of borrowing by the setting
of benchmarks.
v.
Ensure a tolerable structure of external debt and an adequate and
manageable spread of maturities.
vi.
Ensure the diversification of borrowing sources.
vii.
Ensure maintenance of an affordable margin of borrowing
capacity.
viii.
Ensure maintenance of the country‟s credit worthiness on
international capital markets.
ix.
Bi-annual review on the performance of approved facilities.

LEGAL AND REGULATORY FRAMEWORK OF THE ELECRC

3.1
The ELECRC derives its powers from the Public Finance Management
Act Chapter 22:19, Audit Office Act Chapter 22:18, Reserve Bank Act
Chapter 22:10 and Exchange Control Act Chapter 22:05.
3.2
The Public Finance Management Act Chapter 22:19 empowers the
Minister of Finance to borrow on behalf of the state, while at the same time
setting maximum limits to borrowings by the State.
3.3
The Minister of Finance is also empowered to manage all public finances by
the Audit Office Act Chapter 22:18.

3.4
The Exchange Control Act Chapter 22:05, empowers the Reserve Bank of
Zimbabwe to monitor all external capital flows into and/or out of the
country.

ELECRC COMMITTEE
4.1
The External Loans and Exchange Control Review Committee comprises of
the:
i.
Permanent Secretary, Ministry of Finance and Economic
Development and
ii.
Governor, Reserve Bank of Zimbabwe.

ELECRC
CRITERIA
(TERMS
OF
REFERENCE
OR
BENCHMARKS)

5.1
General Guidelines on External Borrowings
5.2
All external loans and commercial credit4 (buyers‟ and/or suppliers‟)
proposals above USD7.5 million5, for both the private sector and parastatals
shall be subject to prior ELECRC approval. Documentation Required
5.2.1 All external loan applications to ELECRC must be accompanied by the
following:
i) A standard term sheet completed in the format attached to the
guidelines. See Annex 1
ii) A loan agreement duly signed by both/all parties;

4 Commercial and/or trade credits for this purpose catergorised as suppliers‟ and buyers‟ credits made available by
banks, suppliers or by both in tandem. Documentary credits such as L/C confirmation facilities also fall in this
category.

5 The figure is regularly reviewed by the Reserve Bank to meet the requirements of the economy.

iii) Immediate past 5-Years Cashflow Summary and Next 5 Years
Cashflow Projections– mainly for new and/or expansion projects.
External Loans Up To USD7.5 Million
5.2.2 All external loans and/or trade credits below USD7.5 million and whose
terms are consistent with Exchange Control Guidelines on External
Borrowings shall be processed and granted formal approval at Authorised
Dealer
Level
and
assigned
a
reference
code
(BANKCODE/EL00NO/WEEK-MONTH-YEAR)
and
registered
with
Exchange Control weekly through EC Form 2L. This form shall now be
submitted by 1000hrs every Monday, registering External Loan Transactions
for the previous week. (See Annexure 4)
5.2.3 External Borrowing– Export Related Activities
5.2.4 ELECRC shall approve all external borrowings for the purposes of financing
working capital and/or productive capital expenditure related to plant and
equipment.
5.2.5 In the case of financing acquisition of second hand equipment, applicants
shall need to submit two independent valuations for assessment by Exchange
Control.
5.2.6 All this external financing shall be for export related business only.
5.3
External Borrowing To Finance General Imports/Non-Export Related
Activities

5.3.1 All external financing for productive businesses that do not export in any
way, shall be accommodated under either new lines of credit or existing
lines of credit arranged through Authorised Dealers.

5.3.2 ELECRC shall approve all applications for the financing of essential imports
such as raw materials, medical drugs, fuel, electricity and grain.
5.3.3 In a multiple currency economy where all players generate foreign currency,
general imports may also be accommodated.
5.4
Negative List for External Borrowing
5.4.1 No external borrowing shall be approved by ELECRC to finance
commercial activities which include the following:
i.
Purchase of houses/property/real estate.
ii.
Purchase of shares/securities/portfolio.
iii.
Purchase/acquisition of an existing company or assets.
iv.
Private consumption/personal loans, e.g. motor vehicles.
v.
Financing of commodity broking.

5.4.2 Individuals/persons
are
forbidden
from
acquiring
any
external
borrowings/loans in their own capacity.
5.4.3 These cannot be financed even from existing lines of credit arranged by
Authorised Dealers and globally approved by ELECRC as import finance.
5.4.4 Notwithstanding the above, the ELECRC reserves the right to waiver items
on the negative list depending on the country‟s prevailing economic
conditions and aspirations.

COMPLIANCE REQUIREMENTS
Compliance with Exchange Control Regulations

6.1
All applications to the ELECRC will only be considered provided the
applicants are in compliance with Exchange Control Rules and Regulations.
This includes compliance with the acquittal of all export documentation such
as:
i.
CD1 forms for export of goods.
ii.
CD3 forms for transportation services;
iii.
TRAS1 forms for non consumptive tourism services;
iv.
TRAS2 for consumptive tourism services
v.
PTS1 forms for cross border postal and telecommunication
services.
vi.
GSD forms for General Service Declaration
6.2
Exporting companies are expected to acquit their export documentation on
the basis of gross export proceeds, with any external loan commitments
being met from the exporter‟s foreign currency receipts.
6.3
Opening of Evidence and/or Escrow accounts should be sanctioned by
Exchange Control.
Compliance with Zimbabwe Debt Management Office (ZDMO)
6.4 All applicants for external facilities must comply with any existing debt
strategy.

Compliance with Prudential Lending Limits
6.5 In terms of Part VI of the third schedule to the Banking Regulations SI 205
of 2000, as read together with Section 15 of the Banking regulations, all
external loans and lines of credit submitted for ELECRC approval should
fall within prudential lending limits.

EXTERNAL BORROWING FOR ZIA APPROVED PROJECTS

7.1 Authorised Dealers should ensure that the gearing (debt to equity) ratio
meets the Exchange Control threshold of not higher than 1:1 before
forwarding such applications to the ELECRC.
7.2 ZIA will only approve projects whose external financing terms have been
approved by the ELECRC.

EXTERNAL BORROWING INDICATIVE TERMS

8.1 The ELECRC shall ensure that the average terms of borrowing are lower by
setting maximum/ceilings on interest rates on new commitments.
8.2 The ELECRC shall set limits on margins above base rates and also ceilings
on fixed interest rates. The reference interest rate should be the London
Inter-Bank Offer Rate (LIBOR).
8.3 Other reference interest rates may be considered by ELECRC where the
borrower has proved beyond reasonable doubt that the lender prefers to use
the said reference rate.
8.4 The ELECRC shall also set maximum/ceilings on other flat fees. Indicative
terms are attached as an appendix.
8.5 These ceilings shall be reviewed on a need basis.

CRITERIA FOR FIXED INTEREST RATES

9.1 The ELECRC shall set the maximum limit on fixed interest rates guided by
the term LIBOR rates and the perceived country risk.
9.2 ELECRC will review each case on its own merit.
10 MATURING DEBT/REPAYMENT PROFILES


10.1 The ELECRC shall ensure that repayments are evenly spread as opposed to
lumping them on specific periods of time. This will be done at the
negotiation and approval stage.
11 EXTERNAL LOANS REGISTRATION AND MONITORING

11.1 All external loans, as may be approved by the ELECRC and Authorised
Dealers must be registered with the ELECRC Secretariat as soon as the loan
agreements are signed.
Specimen Format of the Term Sheet (See Annexure 1 attached) should
accompany the signed loan agreement.
11.2 Authorised Dealers are required to furnish Exchange Control and Economics
Divisions with schedules of all transactions and new credit lines up to USD5
million (disbursements and repayments) on a monthly basis in the specified
format (i.e. Form EC-2L) – for all project and trade external finance
facilities.
12 PROVISION OF FOREIGN EXCHANGE CASHFLOW STATEMENTS

12.1 Authorized Dealers should ensure that, all new applications for commercial
borrowings submitted to ELECRC on behalf of the borrowers and/or
beneficiaries should include foreign exchange cashflow statements (gross
payments and receipts).
12.2 These statements should cover at least, a 3 year historical period (actual
foreign exchange receipts should be confirmed by Authorised Dealers) and
projections for the next 5 years or for the period covering the tenure of the
external loan, whichever is shorter.
12.3 Exchange Control authority shall be required to use shares and immoveable
assets as security on external loans.
13 SECTOR SPECIFIC GUIDELINES

Private Sector External Borrowings
13.1 All private sector external borrowing in such forms as cash loans and/or
trade/commercial credits shall be submitted by Authorised Dealers on behalf
of their clients to Exchange Control for consideration by ELECRC.
13.2 The application should be accompanied by a standard term sheet. (See
Appendix 1).
13.3 Indicative terms of interest rates and fees for all borrowings shall be used
as general guidelines. (See Appendix 2).
13.4 The tenure of such borrowings shall be medium to long-term except for
trade related financing or other commercial credits.

13.5 The purpose of external loans in this category shall be for working capital
(including trade finance or commercial credit) and/or capital expenditure
related to rehabilitation, modernization, expansion (including new projects),
or productive investments6.
13.6 All external borrowings for financing import requirements for
productive (but not export related activities) shall be accommodated
under the existing import lines and new lines of credit arranged through
Authorized Dealers and already globally approved as commercial
credits.
13.7
In a multiple currency environment, general imports can also be considered
provided that the company proves beyond reasonable doubt that it has
capacity to repay loan.

PARASTATALS
AND
PUBLIC
ENTITIES
BORROWING
REQUIREMENTS4
14.1 In order to rationalize offshore borrowing, it is necessary for all public
enterprises to indicate their foreign financing requirements to the ELECRC
on an annual basis.
14.2 Such information should be communicated through their parent Ministry to
the Ministry of Finance, who will then present the borrowing requirement to
the ELECRC.

6 Productive investments here refer to projects which generate exports, employment and/or increasing the productive
base of the economy
4 Public Entities are those commercialized public corporations whose borrowing requirements need Government
approval.

14.3 This requirement is necessitated by the need to ensure that the country
derives maximum benefits from offshore borrowing in terms of interest
charges, margins and other flat fee charges.
14.4 All offshore borrowings by parastatals/ Public Enterprises (PEs) shall be
submitted to Exchange Control for consideration by the ELECRC.
14.5 Such borrowings (cash loans and commercial credits) shall be treated on the
same lines as those for the private sector provided that government
guarantees are not required to fulfill the loan contracts and that the
expenditure does not require approval under the Public Sector Investment
Programme (PSIP). Those that meet these provisions shall be submitted to
ELECRC through the Ministry of Finance for consideration.
14.6 Authorised Dealers are expected to submit together with the application;
letters of comfort from both the Ministry of Finance and the parent Ministry
of the parastatal for which the non-government guaranteed financing is
being arranged.
14.7 All parastatal external borrowings shall be at indicative terms for private
sector borrowings.
14.8 For projects, PSIP approval should be obtained, before ELECRC considers
the financial packages(s).
14.9 Long/Medium term borrowings considered by ELECRC shall have a
minimum of 5 years grace period. The ELECRC can vary this requirement
provided the project is self-financing in foreign exchange terms.

14.10 All borrowings that require a Government Guarantee, shall obtain such
guarantees through the Ministry of Finance, before the ELECRC considers
their application.
14.11 All external borrowings by parastatals and public entities shall need to
conform to the Public Finance Management Act Chapter 22:19.

GOVERNMENT EXTERNAL LOANS

15.1 All External Borrowings by Government shall be submitted to the ELECRC
Secretariat by the Ministry of Finance for consideration by ELECRC.
15.2 All Government external borrowings shall use the general guidelines for
parastatals and private sector borrowings as indicative terms.
15.3 All borrowings by Government for ministerial projects, should obtain PSIP
approval, before ELECRC considers the financial package(s).
15.4 External borrowings for financing public sector projects shall, in general,
have a minimum of 5 years grace period. The ELECRC can vary this
requirement provided the project is self-financing in foreign exchange terms.

CONCESSIONAL
BORROWING
FOR
PUBLIC
SECTOR
PROJECTS
16.1 Government should avoid contracting commercial loans and/or export
credits (either direct and/or to on-lend to parastatals) to finance public sector
projects, which are not self-financing in foreign exchange.

16.2 Financing for such projects should have a high grant element of at least 35%
and terms equivalent to International Development Association (IDA) terms
or better.
16.3 All IDA credits have a 10-year grace period, a zero interest rate, a 0.75%
service charge on outstanding balances and extended maturities – 35 years
for blend borrowers and 40 years for IDA-only borrowers as indicated in the
table below:
17 Indicative Lending Terms for IDA
CREDITOR
GRACE
PERIOD
(YRS)
MATURITY
PERIOD
(YEARS)
Service
Charges
instead
of
Interest Rate
Commitment
Fees
Front-end
Fees
IDA
IDA-only (for least
developing
countries)
Blend (for lowermiddle
income
countries)


DEBT CREATING TRANSACTIONS
18.1 Authorised dealers should note that all other debt creating transactions
shall require prior ELECRC approval.

PENALTIES ON VIOLATION OF ELECRC GUIDELINES
19.1 Authorised dealers who do not comply with the ELECRC Guidelines shall
have the following penalties imposed on them depending on the magnitude
of the violation:

i)
The authorized dealer shall not be permitted to lodge any application with
ELECRC for a specified period;
ii)
The authorized dealership licence can be recommended for withdrawal;
iii)
Any other measure can be taken at the discretion of the Committee.


ECOGAD 1/2014

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Annexure 5: EC-FORM 2L
EC-FORM-2L
INSTITUTION
CODE:
FINANCIAL YEAR:
START DATE:
(Reporting Start Date)
END DATE:
(Reporting End Date)

Name of Exporter/
Beneficiary/
Customer/ Client
Economic
Sector
Name of
the Lender
External Loan
Facility
Amount
Loan
Amount
Interest
Rate
(%)
ELECRC
Authority
Number/
ECAN
Date of
approval/
registration
of Facility
Nature of
Facility
(Direct
Loan or
On-Lent
from
Global
facility)
Purpose
of Facility
Tenor
Total
Flat
Fees
(%)
Repaymet
Schedule
(Attach
Amortisation
Table)
a
Opening
Outstanding
balance from
previous
month(
column 20 of
previous
month)
Amount
disbursed
during the
month
Total Amount
Drawn down or
Utilised
(Capital
Amount)
Reason for
Non
Utilisation
Amount
paid to date
(cumulative)
Outstanding
balance
(column 14+15
less 18)
Principal
Interest

Actual amount repaid for
the month (Indicate
whether Principal or
Interest)

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Appendix 1: Standard Format of the Indicative Term Sheet
1.
Borrower
2.
Lender
3.
Facility/Loan Amount
4.
Purpose of Facility/Loan
5.
Interest Rate
6.
Penalty Rate
7.
Arrangement Fees
8.
Drawdown/Front-end Fees
9.
Commitment Fees
10.
Participation Fees
11.
Facility Tenor
12.
Grace Period
13.
Repayment Frequency
14.
Source of Repayments
15.
Security/Guarantee
16.
Governing Law/Jurisdiction
17.
Borrower‟s Business Activity

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Appendix 2: INDICATIVE OFFSHORE BORROWING PRICING LIMITS FOR 2014


(All charges per annum except
L/C Confirmation fees)
SHORT-TERM TRADE FINANCE7
MEDIUM /LONG
TERM PROJECT
LOANS
ALL
SHAREHOLDER
LOANS,
INCL.VENDOR
FINANCING
LOANS8

Tobacco
Pre/Post Export
Finance
General
Pre/Post Export
Finance


Essential & General
Import Finance
(inc.comm. Credit)9

Margin Above Reference Rate

Commitment Fees (only for
committed lines)

5.00%

0.50%

5.00%

0.50%


6.00%

1.00%

7.00%

1.00%

5.00%

0.50%

TOTAL MARGIN

5.50%

5.50%


7.00%

8.00%

5.50%
L/C Confirmation Fees (per
quarter)

1.5%

1.5%

2.50%

1.5%

Nil

TOTAL FOR FLAT FEES10


7 For Export Credits guaranteed by ECAs, the insurance risk premium will be determined by standard pricing from these agencies.
8 Vendor financing loans will be considered as shareholders loans under the Indigenization Framework.
9 Essential imports include; fertilizers, grain, fuel, medical drugs, seeds, agro-chemicals, animal health drugs and electricity
10 Flat fees includes: Arrangement fees, Management fees, Underwriting fees, Legal and Administrative, Fees, Participation fees, Drawdown/Front-end fees, Insurance, country risk,
Exposure Fees