Monetary
Policy Statement
BY DR. G. GONO
GOVERNOR
RESERVE BANK OF ZIMBABWE
January 2011

ISSUED
IN TERMS OF THE RESERVE BANK OF ZIMBABWE ACT CHAPTER
22:15, SECTION 46
By
DR. G. GONO GOVERNOR
RESERVE BANK OF ZIMBABWE
JANUARY 2011
Monetary
Policy Statement
January2011
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INTRODUCTION AND BACKGROUND

GLOBAL REAL SECTOR DEVELOPMENTS

GLOBAL OUTLOOK

GLOBAL INFLATION DEVELOPMENTS

INTERNATIONAL COMMODITY PRICE DEVELOPMENTS

CAPITAL FLOWS

ZIMBABWE: REAL SECTOR OVERVIEW

AGRICULTURE

TOBACCO

SUGAR

MINING

PLATINUM

CHROME

NICKEL

COAL

MANUFACTURING

TOURISM

INFLATION

YEAR-ON-YEAR INFLATION

MONTH-ON-MONTH INFLATION

SOUTH AFRICAN RAND VERSUS UNITED STATES DOLLAR

OIL PRICE DEVELOPMENTS

MONETARY DEVELOPMENTS

DISTRIBUTIONS OF CREDIT TO THE PRIVATE SECTOR

MULTINATIONAL BANKS

LOANS TO DEPOSITS RATIOS AS AT 31 DECEMBER 2010

FINANCIAL SECTOR DEVELOPMENTS

ARCHITECTURE OF THE BANKING SECTOR

Contents
table of
STATUS OF BANKING SECTOR CAPITALISATION

CAPITALISATION LEVELS OF BANKING INSTITUTIONS

LEVEL OF CAPITALISATION OF ASSET MANAGEMENT
COMPANIES (AMCS)

STATUS OF MICROFINANCE INSTITUTIONS

BANK CHARGES AND DEPOSIT RATES

BASE II IMPLEMENTATION

FINANCIAL INCLUSION

MERGER AND ACQUISITIONS

KINGDOM BANK LIMITED

INTERFIN BANKING CORPORATION LIMITED

PREMIER BANKING CORPORATION

EXTERNAL SECTOR DEVELOPMENTS

EXTERNAL DEBT DEVELOPMENTS

SHORT-TERM TRADE FINANCE FACILITIES

EXCHANGE CONTROL

EXPORT PERFORMANCE FOR THE YEAR 2010

EXPORT PERFORMANCE BY SECTOR

MINING

AGRICULTURE

HORTICULTURE

MANUFACTURING

CROSS-BORDER ROAD FREIGHT

FOREIGN PAYMENTS FOR THE YEAR 2010

GLOBAL FOREIGN PAYMENTS

FOREIGN PAYMENTS BY SECTOR

SOURCES OF FUNDING FOR FOREIGN PAYMENTS

GLOBAL FOREIGN PAYMENTS BY SOURCE OF FUNDS

FOREIGN PAYMENTS BY CATEGORY

GLOBAL FOREIGN CURRENCY TRANSACTIONS

Contents
table of
COMPARISON OF GLOBAL FOREIGN CURRENCY
RECEIPTS FOR THE YEARS 2009 AND 2010

EXPORTERS AND NON-EXPORTERS PAYMENTS
AS FROM 01 JANUARY 2010 TO 31 DEC 2010

FOREIGN CURRENCY REMITTANCES

POLICY MEASURES TO CURB EXTERNALISATION
OF FOREIGN CURRENCY

LIBERALISED EXCHANGE CONTROL FRAMEWORK

ISSUANCE OF EXPORTER’S REGISTRATION CERTIFICATES

EXTENSION OF CREDIT TERM PERIOD FOR EXPORTED GOODS

RE-DESIGNATION OF FOREIGN CURRENCY ACCOUNTS (FCAS)

NATIONAL PAYMENT SYSYTEMS OVERVIEW

LARGE VALUE PAYMENT SYTEMS

REAL TIME GROSS SETTLEMENT SYSTEM

RETAIL PAYMENTS

INTER-BANK CHEQUE SYSTEM

CARD PAYMENT SYSTEM

POS AND ATMS VALUES AND VOLUMES FROM JANURY
TO NOVEMBER 2010

MOBILE AND INTERNET PAYMENT SYSTEMS

SECURITIES SETTLEMENT

REGIONAL AND INTERNATIONAL DEVELOPMENTS

POLICY ADVICE

SANCTIONS

CONCLUSION

Contents
table of
1.
1.1 This Monetary Policy Statement is issued in terms of Section 46 of the
Reserve Bank of Zimbabwe Act (Chapter 22:15) to set the country’s
Monetary Policy for the next 6 months.
1.2 The Policy Statement comes against the background of renewed
inflationary upside risks, underpinned by several factors which include
fuel price increases, wage costs increases that are higher than real
productivity growth, particularly in manufacturing, agriculture and
services sectors; and the rising imported inflation index through cross
exchange rate effects of a stronger South African rand.
1.3 These real inflationary pressures, if not swiftly kept in check through
measures that sustain increased capacity utilization and overall
economic productivity can work to seriously undermine and negate the
macroeconomic gains the country registered over the past two years.
1.4 Under the multiple currency system, the efficiency of the instrument of
monetary aggregates as a tool to fend off inflationary pressures is highly
limited, as money supply in the economy has become exogenous to
Monetary Authorities’ discretionary policy framework.
1.5 This neutrality of monetary aggregates magnifies the need for the country
to fight inflation predominantly through the supply side of the economy,
supported by circumspect fiscal management.
1.6 Coming from the painful background of strenuously dry internal liquidity
conditions in the domestic financial market, another strategic area that
ought to guide overall macroeconomic policies over the outlook period is
foreign investment promotion and retention.
INTRODUCTION AND BACKGROUND
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1.7 It is for this reason that the newly created One Stop Shop for investors
comes as a bold step in the right direction.
1.8 Investment promotion and retention, however, requires that the country
remains steadfastly consistent in creating the necessary conditions for
Zimbabwe to compete favourably with regional economies in attracting
international capital.
2.1 Global economic activity rebounded in 2010, following pronounced
declines experienced in 2009 in the wake of the global financial crisis.
The World economy is estimated to have grown by 4.8% in 2010, well
above the 3.6% average growth rate of the previous decade.
2.2 Post global economic crisis opportunities in trade, investment,
infrastructure development and energy generation provided substantial
growth impetus to economic activity the world over.
2.3 Emerging and developing economies recorded stronger growth of 7.1%,
compared to a growth of 2.7% in advanced economies. Growth in
emerging market economies was spurred by expansion in domestic
demand in China, India and Indonesia.
2.4 The US economy is estimated to have grown modestly by 2.6% in 2010
and is forecast to grow further by 2.3% in 2011, supported by rising
private consumption, increased investment in business equipment and
software, rebounding profits, and normalizing financial conditions.
2.
GLOBAL REAL SECTOR DEVELOPMENTS
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2.5 China is estimated to have grown by 10.5% in 2010, driven by domestic
demand emanating from major fiscal stimulus, a large expansion of
credit, and a number of specific measures to boost household incomes
and consumption. In 2011, China is projected to grow by 9.6%. The
slight moderation is due to tight monetary policy and the planned
unwinding of fiscal stimulus in 2011.
2.6 In India, the economy is estimated to have grown by 9.7% in 2010 and is
projected to grow further by 8.4% in 2011, driven by strong domestic
demand. Robust corporate profits and favourable external financing
encouraged investment. This notwithstanding, the contribution from net
exports is projected to turn negative in 2011, as the strength in
investment further boosts imports.
2.7 In the Latin American Countries, economic activity grew by 5.7% in 2010.
Solid macroeconomic policy fundamentals, coupled with favourable
external financing conditions and strong commodity revenues spurred
economic activity in this region. Latin American economies benefited
immensely from accommodative macroeconomic policy environments in
Brazil, Chile, Colombia and Peru.
2.8 The Euro-area experienced a sluggish economic recovery in 2010,
reflecting the downside risks of the sovereign debt crisis that engulfed the
Euro-area's peripheral nations and its associated contagion effects on
other countries in the Euro-area. As concerns about fiscal sustainability
and financial stability intensified, European Authorities and the
International Monetary Fund (IMF), intervened by providing large support
packages alongside a programme of fiscal consolidation.
2.9 Real GDP in Japan is estimated to have grown by 2.8% in 2010,
underpinned by recovery in exports emanating from stronger-thanMonetary
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anticipated recovery in the Western advanced economies and rising
demand for capital goods from China. Economic growth in the Japanese
economy is, however, projected to marginally slow down to 1.5% in 2011
due to the unwinding of fiscal stimulus and a sluggish labor market.
2.10 In Sub-Saharan Africa, real economic activity is estimated to have grown
by 5% in 2010. Growth in the region was spurred by rebound in global
incomes and high export demand from Europe and the US. In particular,
firming commodity prices enhanced the viability of extractive industries
in the Sub-Saharan region. The pickup in global demand and the
strengthening of oil prices also supported growth in Africa’s oil-exporting
economies.
2.11 South Africa, which contracted by almost 2% in 2009 is estimated to have
grown by 3% in 2010, driven by strong demand for commodities from
emerging markets. In addition, growth was also supported by strong
domestic demand underpinned by the reduction in interest rates in 2010.
South Africa’s output is expected to grow by 3.5 % in 2011.
2.12 Global economic growth prospects remain bright, with global economic
growth forecast at 4.2% in 2011. The rapid economic growth momentum
in emerging and developing countries, coupled with growth in advanced
economies is envisaged to continue in 2011.
2.13 With the impact of the 2008/09 crisis receding, unprecedented post-crisis
recovery plans crafted in 2010 will be implemented, tested, and
assessed in 2011, culminating in a new model for global economic and
financial governance.
GLOBAL OUTLOOK
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2.14 In the outlook period, substantial trade surpluses, high unemployment,
weakened household balance sheets, sluggish income gains, rising oil
prices, and a fragile financial sector will, however, continue to retard the
pace of growth in the global economy.
2.15 Global inflation remained relatively low amid continued excess
capacity and high unemployment. In advanced economies, headline
inflation averaged 1.8% in 2010, before marginally slowing down to
below 1.5% by year end. The US inflation averaged 0.9% in 2010 and
is forecast to rise marginally to 1.1% in 2011.
2.16 In emerging economies, headline inflation average 5.8%, driven mainly
by capacity constraints. Brazil, for example experienced gradual
increases in inflation pressure, while India has seen a sharp rise in
inflation.
2.17 Although the recovery of commodity prices has raised the level of
consumer prices, headline inflationary is forecast to remain low in
advanced economies at 1.25% in 2011, and 5% in emerging market
economies due to sound macroeconomic policies and downward
pressures on wages.
2.18 In the sub-Saharan Africa, firming crude oil and food prices and the
weakening of the US dollar are, however, envisaged to generate adverse
inflationary pressures in the outlook period, despite relative price stability
experienced in 2010.
GLOBAL INFLATION DEVELOPMENTS
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INTERNATIONAL COMMODITY PRICE DEVELOPMENTS
Gold Price US$/OZ
2.19 Following the recovery in global economic activity, international
commodity prices notably for gold, nickel, platinum, copper and crude
oil recovered significantly in 2010.
2.20 Firming commodity prices were buoyed by rising demand in the world’s
largest consumers, notably China and India, whose economies are
expanding at a fast pace.
2.21 The price of gold firmed by 24% from US$1 118.8/oz in January to US$1
392.3/oz in December 2010. The weakening of the US dollar enhanced
gold’s appeal as a safe hedging instrument. Investments in the gold subsector are expected to respond to the favourable prices.


2.22 Nickel prices firmed by 30% from US$18 470.13 per tonne in January
2010 to US$24 045 per tonne in December 2010.
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2.23 Growing demand for nickel in the stainless steel industry in China and
India continue to spur nickel prices.

2.24 Reflecting enhanced viability, Bindura Nickel Corporation is expected to
come back on stream during the course of the year 2011, subject to
availability of capital to restart operations.
2.25 The demand for platinum is estimated to have grown by about 3% in
2010, mainly driven by the recovery in the global automotive and
jewellery industries especially in China and the US.
Nickel Price (US$/tonne)
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Platinum Price (US$/Ounce)

2.26 In response, platinum prices firmed significantly by 9% from US$1 564
per ounce in January 2010 to US$1 711.17 per ounce by December
2010.
2.27 Copper prices rallied in 2010 despite signs of a slowdown in demand.
Copper prices rose by 33% from US$8 853.50/tonne in January to US$9
135.29/tonne in December 2010.
January 2011
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2.28 Oil prices, firmed against the background of a weaker US dollar and
speculation that the U.S. economic recovery will accelerate in 2011
which increased oil consumption. Reflecting the Crude oil prices
increased by 28% from US$71.68/barrel in January to US$91.75/barrel
in December 2010.
2.29 There are signs of renewed foreign investor interest in sub-Saharan
Africa. Access to international capital markets has broadened. Notably,
South Africa returned to the international bond market in mid-2009,
Senegal issued its first international bond in December 2009, and
Seychelles concluded a successful debt exchange operation in February
2010.
2.30 Countries such as Angola, Kenya, Mozambique, Nigeria, and Tanzania
Copper Prices (US$/tonne)
CAPITAL FLOWS
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have also indicated their intention to borrow in international capital
markets, through sovereign debt instruments.
2.31 Private capital flows from official and private sources continued to
increase in 2010 due to a combination of both pull and push factors.
2.32 The driving push factors encompassed global determinants such as
interest rates and market growth. The pull factors included among other
things, the quality of institutions, economic stability, and deep and open
financial markets. Fiscal discipline and abundant natural resources have
combined to significantly attract FDI into sub-Saharan Africa.

Source: World Economic Outlook, October 2010
2.33 Most of the region’s low income countries have not benefited from the
recent surge in private capital flows. About, two-thirds of inflows over the
last economic cycle went to South Africa and Nigeria.
Sub-Saharan Africa: Private Financing Flows
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2.34 Competition for external private financing has also intensified, given
budget constraints faced by donors. This underscores the need for
reforms in some sub-Saharan countries to liberate productive potential,
promoting trade and financial sector development, encouraging
domestic savings and investment, raising standards of governance, and
building up institutions. These reforms will assist countries to attract
sustained private capital inflows.
3.1
The Zimbabwean economy is estimated to have grown by 8.1% in 2010,
buoyed by improvements in all the sectors of the economy. Significant
growths were recorded in mining (47%) and agriculture (34%).
3.2
The positive growth reflects the general economic stability and sound
macroeconomic policies implemented by Government. The economy
has also immensely benefited from the normal agriculture season and
the firming up of international mineral prices.
3.3
Economic performance is, however, still constrained by challenges that
include power outages, liquidity shortages, obsolete infrastructure,
external debt overhang, low aggregate demand, skills gap and high
unemployment.
3.4 Agriculture output is estimated to have grown by 34% in 2010 and is
expected to continue on a recovery path in 2011.
3.
ZIMBABWE: REAL SECTOR OVERVIEW
AGRICULTURE
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MAIZE
TOBACCO
3.5 As at the end of December 2010, a total of 660 000 hectares of maize had
been planted, compared to 530 000 hectares planted in 2009. If the crop
is not severely affected by intra-dry spells, the country is likely to realise a
better crop.
3.6 Maize output may, however, be lower than expected due to an outbreak
of armyworm which has hit the major maize growing areas. Measures
have, however, been put in place to monitor and control the situation and
farmers have been assured of the availability of adequate chemicals for
the purpose.
3.7 Tobacco output increased from 58 million kgs in 2009 to 123 million kgs in
2010. A total of 65 000 hectares were put under tobacco, with 65%
grown under contract. The tobacco was sold at an average price of
US$2.88 per kg.
3.8 In 2011, tobacco output is expected to increase to between 170 and 200
million kgs on the back of increased hectarage. It is estimated that above
100 000 hectares of tobacco will be planted in 2011.
3.9 Average tobacco prices are expected to remain firm, reflecting global
supply and demand conditions.
3.10 The coming back on board of renowned international buyers such as
Japan Tobacco Industries (JTI) and Premier Tobacco, is likely to boost
tobacco prices.
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COTTON
SUGAR
MINING
3.11 Cotton output increased from 211 000 tonnes in 2009 to 260 000 tonnes
in 2010. The sub-sector is benefiting from the availability of financing
and marketing arrangements under Statutory Instrument 142 of 2010,
which protects both cotton farmers and cotton buyers, prohibiting side
marketing. This has boosted confidence in the sector.
3.12 Cotton output is expected to rise to 300 000 tonnes, against the
background of favourable prices. International lint prices, which rose to
US$1.7 per kg during the last quarter of 2010 are currently trading firm at
US$1.5 per kg.
3.13 Sugar output for 2010 was estimated at 350 000 tonnes up from 259 000
tonnes in 2009 due to significant support from the European Union (EU).
3.14 In 2011, sugar output is projected to increase to 450 000 tonnes, driven by
expected higher production levels by Triangle and Hippo valley.
Rehabilitation of infrastructure in existing cane production areas is also
expected to boost sugar output.
3.15 Mining output is estimated to have grown by 47% in 2010, underpinned
by improvements in the production of all minerals. Notably, chrome
increased by 148%; gold, 61%; nickel, 26%; coal, 25%; and platinum,
24%, largely driven by buoyant international commodity prices.
3.16 Mining output also benefited from investment in expansion programmes
and recapitalisation of mining operations.
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3.17 Erratic power supply and the unavailability of affordable credit, however,
continued to weigh down production.
3.18 In 2011, mining output is projected to increase by a further 44%, following
the resumption of operations by Bindura Nickel Corporation and
Zimalloys. The opening of Unki Mine is also expected to significantly
boost Platinum output.
3.19 Cumulative gold output to October 2010 amounted to 7 610kgs, which is
significantly higher than levels attained in 2009.


3.20 In 2011, gold output is projected to increase to 13 000kgs, underpinned
by firming international prices, and re-opening and recapitalisation of
existing mines in response to the stable macroeconomic environment.
Monthly Gold Production (January-October 2010)
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3.21 Cumulative platinum output to October 2010 was 7 252kgs, compared to
6 848kgs in 2009. Production is expected to increase to 12 500kgs in
2011programmes, mostly at Unki and Mimosa mines.
3.22 Chrome production is estimated to have increased significantly by 148%,
from 201 000 tonnes in 2009, to 500 000 tonnes in 2010, driven by
increased processing at ZIMASCO and Zimbabwe Alloys.
3.23 In 2011, chrome output is projected to increase further to 700 000
tonnes as a result of planned expansion programmes by the mining
houses.
3.24 Nickel production remains subdued owing to non-resumption of
production at Bindura Nickel Corporation, which has remained under
care and maintenance since 2008.
3.25 Output is, therefore, estimated at 6 120 tonnes in 2010, from 4 857 tonnes
in 2009, in line with increased activities in PGMs.
3.26 If Bindura Nickel Mine resumed operations in the first quarter of 2011,
output is expected to increase to 7 600 tonnes.
PLATINUM
CHROME
NICKEL
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COAL
MANUFACTURING
TOURISM
3.27 Coal output is estimated at 2 million tonnes in 2010, up from 1.6 million
tons in 2009, following investments by Hwange Colliery on the dragline
and the coal screening machine, complemented by viable coal pricing. In
2011, coal output is projected to further increase to 3 million tons.

3.28 The manufacturing sector is estimated to have grown by 2.7% in 2010 and
is projected to register a higher growth of 5.7% in 2011.
3.29 Manufacturing sector capacity utilisation improved to 43.7% in the first
half of 2010 compared to 32.3% for the same period in 2009.
Improvements in the agriculture sector are also expected to stimulate
manufacturing activity.
3.30 Manufacturing sector activity, however, continues to be constrained by
shortages of working capital, obsolete equipment, inadequate power
supply, unsustainable wage demands, competition from imports, and low
domestic demand.
3.31 The tourism sector continued on a recovery path, anchored by
improvements in global demand and stability in the economy.
Cumulative tourist arrivals up to the third quarter of 2010 increased to 781
177, from 532 971 recorded during the same period in 2009.
3.32 Reflecting this, hotel and lodge room occupancy levels increased from
31% and 26% recorded in 2009 to 39% and 31% recorded in 2010,
respectively.
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3.33 Consequently, total tourism receipts increased from US$52.7 million in
2009 to US$65.1 million in 2010, representing an increase of 23.5%.
3.34 Hunting sector receipts, however, remained stagnant at US$16 million in
2009 and 2010.
3.35 Tourism growth in 2011 will be underpinned by expected improvements
in the performance of both domestic and regional source markets.
3.36 In 2010, the economy continued to experience low and stable inflation,
against the background of sound macroeconomic policies and general
improvement in the supply side of the economy.
3.37 Zimbabwe’s inflation remains well below levels prevailing in other
countries in the region, reflecting macroeconomic stability.
3.38 The Table below shows inflation profiles for selected countries in the
SADC region as well as for the USA.
INFLATION
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)

Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

June 2010

July 2010

Aug 2010

Sept 2010

Oct 2010

Nov 2010
4.2
3.6 7.2
n/a 5.5 7.1
6.4
1.1
3.39 In 2010, annual inflation remained within the single digit range, peaking at
6.1% in May before declining to 4.2% in November.
Annual Inflation Profile (%)

Annual Inflation for SADC Countries and USA (%
Zimbabwe SA Botswana
Mozambique
Tanzania Zambia
Malawi USA
YEAR-ON-YEAR INFLATION
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MONTH-ON-MONTH INFLATION
Month on Month Inflation (%)
3.40 Monthly inflation decelerated from a peak of 1.1% in March to 0.4% in
November 2010.


3.41 Inflation developments in 2010 have been to a larger extent been
determined by the movements of the rand/US dollar exchange rate
dynamics.
3.42 The firming of the rand against the US dollar will continue to induce
inflation pressures in the economy.
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South African Rand versus United States Dollar

3.43 The continued increase in international oil prices is expected to have a
knock on effect on inflation. Reflecting increases in international oil
prices, domestic fuel prices increased in December 2010 by more than
20%, translating to a first round effect on prices of between 0.15% and
0.20%.
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3.44 The second round effects of the rise in fuel prices would be more
pronounced as it is expected to cascade down to the other sectors of the
economy.
3.45 Rising food prices on the world market have also stoked inflationary
pressures in the economy.
3.46 In 2010, financial intermediation improved, as reflected by growth in
deposits and lending to the productive sectors.
3.47 Total deposits in the banking system increased from US$1.4 billion in
January to US$2.1 billion in November 2010.
3.48 Major sources of deposits were from the service industry (27.5%) and
households (16.9%). Volatile short term deposits, however, accounted
for more than 90% of total.
Oil Price Developments
MONETARY DEVELOPMENTS
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3.49 Credit to the private sector grew from US$759.6 million in January to
US$1 485.4 million in November 2010. The major beneficiaries were
agriculture (22.3%), manufacturing (20.3%), distribution (20%),
households (7.6%) and mining (6.7%).
3.50 The loans to deposit ratio rose to 76.2% in October, before declining to
68.8% in November, 2010. These levels are close to the international
benchmark of 70-90%.
3.51 Lending rates remained prohibitive to the productive sectors. Lending
rates ranged between 12% and 18% annualy, relatively much higher
than the prime lending rate of 9% prevailing in South Africa.
Distributions of Credit to the Private Sector
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Other 23%
Distribution 20%
Manufacturing 20%
Mining 7%
Households
8%
Agriculture 22%
3.52 The money market remained generally inactive, largely due to low
liquidity levels. In the absence of Treasury bills, only instruments which
dominated the money market were short-term bankers acceptances.
3.53 Activity in the inter-bank market was also, severely curtailed by the
unavailability of Treasury bills, which are regarded as a risk-free
instrument for collateral purposes.
3.54 The resumption of the Lender of Last Resort function of the Central Bank
will instil confidence in the money and credit markets. As liquidity
improves, banks are expected to increase long-term lending to the
productive sectors of the economy. Such long-term financing is critical to
the revival of domestic industries which need to re-equip, refurbish as
well as replace obsolete machinery.
4.1 The Reserve Bank has noted with serious concern the continued aloof
attitude by some multinational banks towards the need to actively
support the domestic economy.
4.2 In some cases, this aloof attitude has been explicitly exhibited through
the extension of the illegal international sanctions on Zimbabwe by these
banks, taking instructions from their international parentages.
4.3 Under these misguided practices, some internationally owned domestic
banks are deliberately declining loans to Zimbabwean companies and
individuals appearing on the illegal EU/USA sanctions lists.
4.4 Equally retrogressive, the internationally owned banks are paralysing the
money and capital markets by sterilizing huge domestic deposits which
4.
MULTINATIONAL BANKS
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funds they are not passing on to the productive sectors of the economy
through lending.
4.5 The low levels of overall loans to deposit ratios at these banks are a
development which is constraining the economy’s recovery.


Agribank
30,279,740.11
24,740,194.02
122.39%
BancABC

129,014,875.21
211,426,832.43
61.02%
Barclays
43,638,980.00
172,995,527.00
25.23%
CBZ
431,699,789.87
572,900,927.41
75.35%
CFX
0.00
0.00
0.00%
FBC
73,482,046.22
134,941,093.16
54.45%
IBC

-

-

-
Kingdom
101,681,713.56
111,297,344.35
91.36%
MBCA
86,619,505.57
68,356,458.94
126.72%
Metropolitan
29,101,310.04
43,968,427.86
66.19%
NMB
62,008,242.49
87,898,364.10
70.55%
Stanbic
100,532,619.03
296,587,046.17
33.90%
Stanchart
110,536,931.82
217,953,691.01
50.72%
TN
36,691,180.54
53,844,841.22
68.14%
ZABG
1,516,545.45
14,271,448.61
10.63%
ZB Bank
72,694,258.63
102,092,912.68
71.20%
TOTAL
1,309,497,738.54
2,113,275,108.95

AVERAGE
87,299,849.24 140,885,007.26
61.97%


Genesis
1,629,969.12
1,491,060.70
109.32%
Interfin
131,960,326.71
126,497,771.70
104.32%
NDH
-
- -
Premier
17,077,494.04
44,725,894.06
38.18%
ReNaissance
64,934,549.83
62,396,359.16
104.07%
Tetrad
33,288,840.45
37,306,260.88
89.23%
TOTAL
248,891,180.15
272,417,346.50

AVERAGE
41,481,863.36
45,402,891.08
91.36%


CABS
58,174,444.02
118,786,723.49
48.97%
CBZ Building Society
18,876,373.79
10,414,617.69
181.25%
FBC Building Society
7,236,454.89
7,023,587.87
103.03%
Loans to Deposits Ratios as at 31 December 2010
Name of Institution
Total Loans & Overdrafts
Total Deposits
Loans to Deposits Ratio
Commercial Banks
Merchant Banks
Building Societies
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Name of Institution
Total Loans & Overdrafts
Total Deposits
Loans to Deposits Ratio
Savings Banks
5.
FINANCIAL SECTOR DEVELOPMENTS
ARCHITECTURE OF THE BANKING SECTOR
ZB Building Society
3,424,444.72
7,818,608.93
43.80%
TOTAL
87,711,717.42
144,043,537.98

AVERAGE
21,927,929.36
36,010,884.49
60.89%


POSB
23,177,189.19
37,869,754.95
61.20%
TOTAL
23,177,189.19
37,869,754.95
GRAND TOTAL

Over the outlook period, the Reserve Bank will ensure that these
retrogressive attitudes and practices are decisively dealt with in the
interest of laying a solid foundation for sustainable financial
intermediation in the economy.
5.1 The Zimbabwean banking sector has experienced a gradual
improvement in its intermediation role since the introduction of the
multi currency regime.
5.2 The banking sector has generally remained in a safe and sound financial
condition, notwithstanding the challenging macro-economic
environment characterised mainly by market illiquidity, low savings,
volatile deposits and short term loans.

5.3 As at 31 December 2010, the country’s banking sector remained well
diversified, comprising 25 operational banking institutions; 16 licensed
Asset Management Companies; and 114 operating microfinance
institutions under the supervision of the Reserve Bank.
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January2011
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Structure of the Banking Sector
Type of Institution
Number
STATUS OF BANKING SECTOR CAPITALISATION
Capitalisation Levels of Banking Institutions
Commercial Banks*

Merchant Banks

Finance Houses

Discount Houses

Building Societies

Savings Bank

Total

Asset Management Companies

Microfinance institutions

* Excludes Royal Bank and Barbican Bank which were re-licensed but are not
yet operational
5.4 Cognisant of the recapitalisation challenges at some banking institutions,
the Reserve Bank extended the deadline for compliance with the
minimum capital requirements to 31 December 2010.
5.5 As at 31 December 2010, nineteen (19) out of 24 banking institutions
(excluding POSB, Intermarket Banking Corporation and the defunct
NDH Merchant Bank) were in compliance with the prescribed minimum
paid-up capital requirements.
5.6 In order to consolidate the current improving stability in the financial
sector, it has become necessary that the deadline for paid up capital
thresholds be further extended to 30th of June, 2011.
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5.7 The Reserve Bank is very satisfied with the various recapitalisation
initiatives that are being implemented by individual banks.
5.8 As at 31 December 2010, all asset management companies had met the
minimum paid-up equity capital requirement of $500 000.
5.9 Efforts should continue to be made by Shareholders, Boards and
Management Teams to go beyond the set minimum capital levels in order
to further strengthen the operations of asset management companies.
5.10 As at 31 December 2010, there were 114 operational microfinance
institutions under the supervision of the Reserve Bank. The licensing
process for microfinance institutions has been revamped in order to
reduce the turnaround time for licensing to a period less than one week
provided all the required documentation is available. Bank charges and
deposit rates
5.11 The Reserve Bank continues to promote market determined charges and
interest rates for bank products and services, albeit cognisant of the need
to balance viability of the banking sector and accessibility to affordable
banking services by the Public and Corporate Sectors.
5.12 The Bank, however, notes with concern the large disparities between
lending rates and deposit rates at some banking institutions,
underscoring the need to improve their pricing structures.
Level of Capitalisation of Asset Management Companies (AMCs)
Status of Microfinance institutions
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January2011
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BASE II IMPLEMENTATION
FINANCIAL INCLUSION
5.13 During the second quarter of 2010, the Reserve Bank issued to the
market a consultative Basel II framework entitled “Guideline No. 12010/BSD: Technical Guidance on Basel II Implementation in
Zimbabwe”.
5.14 The framework sets new criteria for calculating banking institutions’
regulatory capital, the supervisory review process as well as the
minimum disclosure requirements. The sector has since provided
valuable comments that have now been incorporated into the final
document.
5.15 Following this comprehensive consultative process, the Reserve Bank
has now finalised the Basel II framework, which framework is being
issued electronically with immediate effect.
5.16 The Basel II framework is accompanied by a detailed implementation
road map that provides more specific tasks such as development of
specific implemention plans, data requirements and submission of
revised statutory returns.
5.17 The Reserve Bank continues to encourage financial institutions to extend
provision of financial services to the marginalised poor and rural
communities who are currently unbanked to enable them to make a
meaningful contribution to the economy.
5.18 In this regard, banking institutions have partnered with mobile operators
to provide various mobile banking and other electronic based products to
the previously unbanked and marginalised communities.
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5.19 Banking institutions such as Kingdom, FBC, NMB, TN Bank, CABS,
Barclays Bank and Tetrad have entered into strategic alliances with
mobile phone operators to develop new financial services delivery
channels. These efforts are highly complemented.
5.20 Since the amendment of the Banking Act [Chapter 24:20] to allow for the
registration and supervision of Microfinance Banks, the Reserve Bank
has received a number of applications to venture into this sector. As at 31
December 2010 six (6) Microfinance Bank applications had been
received and are under evaluation.
5.21 Following an extraordinary general meeting held on 13 October 2010,
Kingdom Financial Holdings Limited (KFHL) was demerged from Meikles
Limited (ML). Kingdom Financial Holdings has ceased to be a wholly
owned subsidiary of ML.
5.22 Interfin Banking Corporation Limited merged operations with CFX Bank,
following its acquisition of significant shareholding in CFX Bank.
5.23 Premier Finance Group’s shareholding structure changed significantly
following the acquisition of 70% stake by Ecobank. The acquisition was
MERGER AND ACQUISITIONS
Kingdom Bank Limited
Interfin Banking Corporation Limited
Premier Banking Corporation
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approved by the Central Bank, Competition and Tariff Commission, the
Ministry of Youth Development, Indigenisation and Empowerment as
well as Ecobank regulators.
5.24 Following the setting aside of funds by the Ministry of Finance for
purposes of kick-starting the Reserve Bank’s lender of last resort facility,
the pertinent guidelines for this framework have now been put in place.
5.25 Accordingly, therefore, the banking sector is hereby advised that the
Central Bank’s lender of last resort window is now open, effective 1
February, 2011.
5.26 It should be noted, however, that due to the limited nature of the resources
earmarked for this purpose, support will be rendered primarily to
smoothen intraday credit-push requirements.
5.27 Equally important, banks are further advised that this window should not
be abused as a first resort facility, as it is expected that banks lend each
other bilaterally in the normal course of their money market trading
activities.
5.28 The operational modalities, as well as the requisite collateral
arrangements will be availed to the market in due course.
5.29 The country’s total external debt stock amounted to US$6 929 million as at
LENDER OF LAST RESORT WINDOW
EXTERNAL SECTOR DEVELOPMENTS
External Debt Developments
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31 December 2010, representing 103% of GDP, a level which is above
the international debt sustainability benchmark of 60%.
5.30 The bulk of the country’s external debt is owed to multilateral creditors,
which account for 36% of the country’s total debt. Bilateral and
commercial creditors are owed 33% and 31%, respectively. Central
Government remains the largest debtor at 57% while parastatals and the
private sector owe 35% and 8%, respectively.

TOTAL Debt

Public And Publicly Guaranteed 6 413.9
4 729.3
3 966.3
725.1
Government Long Term

Bilateral creditors

Paris Club

Non-Paris Club

Multilateral creditors

Parastatal Sector Long Term

Bilateral creditors

Paris Club

Non-Paris Club

Multilateral creditors

Private Sector Long Term

Short Term Debt

Supplier's Credits

Reserve Bank

Private sector
403.3
0.0

0.0
0.0
Source: Ministry of Finance and Reserve Bank of Zimbabwe
5.31 In 2010 short-term trade finance facilities amounting to US$1.5 billion
were approved compared to a total of US$850.2 million approved in
2009.
External Debt and Payment Arrears (US$m): 31 December 2010
DOD
Total Arrears
Principal Arrears Interest Arrears
SHORT-TERM TRADE FINANCE FACILITIES
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Comapnies Approved Amount in (USD Million) Amount (USD Million) Utilization (%)
Agriculture

613.2

60.3%
Financial

344.5
90.5
26.3%
Mining

193.7
58.3
30.1%
Telecommunications

174.2
30.0
17.2%
Manufacturing

118.4
30.7
25.9%
Tourism

28.6

38.5%
Distribution

5.2
5.2
100.0%
Energy

10.0

0.0%
Total

1 487.8
595.7
40.0%
Comapnies Approved Amount in (USD Million) Amount (USD Million) Utilization (%)
Financial

285.4
125.5
44.0%
Agriculture

279.7
155.6
55.6%
Mining

150.9
82.6
54.7%
Manufacturing

22.4
25.7%
Energy

77.3%
Tourism

3.2
3.2
100.0%
Total

850.2
423.3
49.8%
5.32 Approvals of short-term Trade Finance Facilities were spread across
eight economic sectors with the agriculture sector, accounting for
US$613.2 million.
5.33 Approvals in the agricultural sector largely reflected funding requirements
by tobacco and cotton merchants for the purchase of tobacco and cotton
during the marketing seasons.
5.34 The financial sector, accounted for US$344.5 million, largely in respect of
global facilities for on-lending by the banking sector to their exporting and
importing clients.
Summary of Approved Short-term Facilities Jan ñ Dec 2010
Sector
Number of
ELCC Approved
Utilized Amount
Percentage
Summary of Approved Short-term Facilities Jan – Dec 2009
Sector
Number of
ELCC Approved
Utilized Amount
Percentage
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5.35 The telecommunications and manufacturing sectors accounted for
US$174.2 million and US$118.4 million, respectively. Sectoral Loan
Approvals January- December 2010
5.36 Regional trade finance banks such as the PTA Bank, Afreximbank, South
African and Chinese financial institutions continued to be the major
lenders to Zimbabwe.
6.1
In 2010, total export shipments (declared on Forms CD1) amounted to
US$2 221.6 million, compared to US$1 366.2 million declared during the
same period in 2009, representing an increase of 62.6%.
6.
EXCHANGE CONTROL EXPORT PERFORMANCE FOR THE YEAR 2010
Global Export Performance in 2010
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6.2
The positive export performance recorded during the year 2010 was
largely attributable to a significant increase in mineral export shipments.
6.3
On a sectoral basis, mineral export shipments accounted for 64.5%
followed by tobacco exports (17.2%), agriculture (8.4%), manufacturing
(7.6%), horticulture (0.7%) and hunting safari (0.4%).
January

February

March

April

May

June

July

August

September

October

November

December

Total

Source: Computerised Export Payments Exchange Control System (CEPECS)
6.4 Mineral export shipments (including Gold and Diamonds) amounted to
US$1 719 million in 2010 compared to US$708 million worth of exports in
2009. This represents a significant growth of 143%.
6.5 The surge in mineral export shipments was a result of increased gold
Total Monthly Export Shipments (USD)
Month

Variance
% variance
EXPORT PERFORMANCE BY SECTOR
Mining
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export shipments following the liberalisation of gold trading and the
firming up of international metal prices. There was also a substantial
increase in ferrochrome exports. Furthermore, there were increased
diamonds exports as a result of the certification of Zimbabwe’s diamonds
by the Kimberly Process Certification Scheme.
Month

Variance
% Variance
January
89,470,846
24,119,082
65,351,764

February
110,355,783
22,576,810
87,778,973

March
132,002,961
34,223,237
97,779,724

April
88,409,648
44,560,869
43,848,779

May
86,758,751
38,053,126
48,705,625

June
91,960,348
44,033,819
47,926,529

July
145,116,663
67,734,875
77,381,788

August
167,662,144
60,931,254
106,730,890

September
159,479,602
79,604,472
79,875,130

October
111,477,808
60,864,130
50,613,678

November
201,349,239
72,413,085
128,936,154

December
335,452,525
158,846,727
176,605,798

Total
1,719,498,328
707,961,486
1,011,536,842.00

Source: Computerised Export Payments Exchange Control System (CEPECS)

Platinum
741,108,712
396,765,378.83
344,343,333

Diamond
361,130,353
37,387,973
323,742,381

Gold
334,214,180
131,866,046
202,348,134

Ferrochrome
272,521,305
60,798,346
211,722,959

Other

Total
1,719,498,338
707,961,486
1,011,536,842

Source: Computerised Export Payments Exchange Control System (CEPECS)
Monthly Mineral Export Shipments (USD)
Mineral Export Shipments (USD)
Mineral

Variance
(%)Variance
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DIAMOND
Rough Diamond Export Shipments (USD)
Month

Variance
% Variance
GOLD
6.6 In 2010, diamond export shipments amounted to US$361.1 million
compared to US$37.4 million worth of exports in 2009. This represents a
significant increase of 866%.
Jan
3,755,236
585,395
3,169,840

Feb
2,833,968

2,833,968

Mar

Apr

May

1,570,441
(1,570,441)
(100)
Jun

4,217,122
(4,217,122)
(100)
Jul

1,580,910
(1,580,910)
(100)
Aug

Sep

Oct

12,745,221
(12,745,221)
(100)
Nov

50,298,069
3,158,709

47,139,359
1,492
Dec

Total
361,130,353
37,387,973
323,742,380

6.7 In 2010, Gold export shipments amounted to US$334.2 million compared
to US$131.9 million worth of exports in 2009.
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Jan

17,204,830 -

17,204,830

Feb

17,768,332 -

17,768,332

Mar
20,446,643

6,235,018

14,211,625

Apr

21,799,069
5,012,217

16,786,852

May

22,089,198
7,069,755

15,019,443

Jun

25,761,974
8,054,483
17,707,490

Jul

29,480,251

14,092,470

15,387,781

Aug

27,706,843

14,486,975

13,219,869

Sep

33,892,275
17,180,080 16,712,195

Oct

38,101,736
20,305,872 17,795,864

Nov

36,451,725 20,847,950 15,603,775

Dec

43,511,304

18,581,226 24,930,079

Total
334,214,180
131,866,046 202,348,134

6.8 Total agricultural export shipments (i.e. General Agriculture, Horticulture
and Tobacco) amounted to US$582.6 million compared to US$467.7
million in 2009, an increase of 24.6%.
6.9 In 2010, export shipments under the General Agriculture sub-sector
increased from USD170.6 million recorded in 2009 to USD185.9 million
in 2010, representing an 9% increase.
Gold Export Shipments (USD)
Month

Variance
% Variance
Agriculture
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General Agriculture Export Shipments (USD)
Month

Variance
% Variance
HORTICULTURE
January

February

March

April

May

June

July

August

September

October

November

December

Total

Source: Computerized Export Payments Exchange Control System
(CEPECS)
6.10 Total horticultural export shipments amounted to US$14.58 million in
2010, compared to US$14.57 million in 2009, reflecting a marginal rise of
0.1%.
6.11 The horticulture Sector was not spared from natural, as well as man
made challenges. The fresh cut flowers sub-sector incurred major losses
due to grounding of many flights as a result of the volcanic ash in many
European countries.
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January2011
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January

February

March

April

May

June

July

August

September

October

November

December

Total

Source: Computerized Export Payments Exchange Control System (CEPECS)
6.12 Export shipments of manufactured goods amounted to US$170.6 million
in 2010, compared to US$160.7 million for the same period in 2009. This
represents a rise of 6.1%.
Horticulture Export Shipments (USD)
Month

Variance
% Variance
Manufacturing
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January2011
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Manufacturing Export Shipments (USD)
Month

Variance
% Variance
Cross-Border Road Freight
January

February

March

April

May

June

July

August

September

October

November

December

Total

Source: Computerized Export Payments Exchange Control System (CEPECS)
6.13 During the year 2010, some cross border transport operators successfully
revived their old trucks while others managed to import new trucks.
Despite the same efforts, the local transporters still lack in reliable
equipment for cross border business. The country lacks tankers to
handle liquid cargo, as well as suffers from general shortage of trailers.
6.14 Though the country has an advantage of being central in the SADC
region, the competition from the region, particularly from South African
transporters has somewhat outweighed the comparative advantage of
Zimbabwe’s centrality in the region.
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6.15 Some noticeable green-field investments were realised in the cross
border transport sector particularly by Zimbabweans in the Diaspora as
evidenced by quite a number of small operators owned by individuals and
small-to-medium enterprises (SMEs) who started registering for cross
border business during 2010.
6.16 Within the prevailing economic framework, the value of freight services
generated in foreign currency from transit, export and import cargo
declined by 3.3% in 2010, as depicted in the table below.

January

February

March

April

May

June

July

August

September

October

November

December

Total

Cross Border Road Freight Earnings (USD)
Month

Variance
% Variance
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FOREIGN PAYMENTS FOR THE YEAR 2010
Global Foreign Payments
Monthly Foreign Payments (USD)
Month

Variance
% variance
Source: Computerised Exchange Control Batch Application System (CEBAS)
6.17 In 2010, Authorized Dealers (commercial and merchant banks) processed
foreign exchange payments amounting to approximately US$2.5 billion.
This represented a 69% increase compared to the figure of about US$1.5
billion recorded over the same period in 2009.

January


February

185,174,656
136,030,489
9,144,167

36%
March
175,334,183 76,592,289
98,741,895
129%
April

157,544,095 75,018,475 82,525,620
110%
May


June

114,192,713
128,362,305 (14,169,592)
(11%)
July


August

September
273,771,324 154,776,830
118,994,494
77%
October
305,068,733 186,683,289
118,385,445
63%
November
341,931,972 101,436,659
240,495,314
237%
December
301,340,780 109,438,121
191,902,659
175%
TOTAL
2,495,711,488
1,479,417,074 1,016,294,414
69%
6.18 The significant increase in foreign payments in the year 2010 can be
attributed to current account convertibility introduced in the year 2009.
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Computerised Exchange Control Batch Application System (CEBAS)
6.19 Whilst 2010 experienced increases in foreign payments, the monthly
trends were the same as those of 2009. There was modest activity in the
first quarter of the year, increased activity from the second quarter to the
last quarter of the year.
6.20 Generally, all sectors of the economy experienced increases in the level
of foreign payments in the year 2010, with the exception of the agriculture
sector which recorded a decline of 4% in 2010.
Monthly Foreign Payments
Source:
Foreign Payments by Sector
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Jan
Foreign Payments by Sector (USD)
Sector

Variance
% variance Contribution Contribution
(2010) (2009)
Source:
SOURCES OF FUNDING FOR FOREIGN PAYMENTS
Agriculture

Retail &Distribution 551,777,413

Manufacturing

Mining

Services 676,033,252

TOTAL


Computerised Exchange Control Batch Application System (CEBAS)
6.21 The services and mining sectors remain the dominant sectors,
accounting for more than 50% of the foreign payments. The mining
sector has increased production to capitalize on the firming metal prices,
whilst import demand in the services sector is being driven by expansion
in the telecommunications sector.
6.22 Export proceeds remain the major source of funding for foreign
payments, accounting for more than 65% of total funding. Global
Foreign Payments by Source of Funds
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Source

Change
% Change Contribution (2010) Contribution (2009)
Source:
FOREIGN PAYMENTS BY CATEGORY
Category

Change % Change Contribution (2010) Contribution (2009)
Source:
FCAs
1,569,281,815 1,051,814,571 517,467,244 49%
64%
71%
Local Sources
(Interbank,
Local Sales) 455,362,906 48,906,277 406,456,629 831%
19%
3%
Offshore
Lines of
Credit
418,404,049 378,696,226 39,707,823 10%
17%
26%
TOTAL 2,443,048,769 1,479,417,074 963,631,696 65%
100%
100%
Computerised Exchange Control Batch Application System (CEBAS)
6.23 Offshore lines of credit also remain a significant component of funding for
foreign payments. With the improved operating environment and viability
of local enterprises, more external lines of credit are expected.
6.24 The Liberalised Exchange Control Framework will continue to encourage
the inflow of private capital into Zimbabwe to boost domestic liquidity.
Foreign Payments by Category of Goods/Services
Capital Goods 440,506,786

Raw Materials 190,689,635

Consumables 639,648,777

Service Fees &
Capital
Repayments 1,224,866,291 758,895,076

TOTAL

Computerised Exchange Control Batch Application System (CEBAS)
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GLOBAL FOREIGN CURRENCY TRANSACTIONS
Global Foreign Currency Receipts
Global Foreign Currency Receipts (USD)
TYPE OF RECEIPT
YEAR 2010
% CONTR
YEAR 2009
% CONTR
% CHANGE
Comparison of Global Foreign Currency Receipts for the Years 2009 and 2010
Foreign Currency Payments by Authorized Dealers
6.25 Global Foreign Currency receipts amounted to US$2.9 billion in 2010. A
total of US$1.7 billion was received during the same period in 2009
representing a 74% increase. Export proceeds amounted to US$2.2
billion and for the same period in 2010 amounted to US$1.1 billion.

Export Proceeds
2 210 186 658

1 094 368 189

Loan Proceeds
50 277 770

30 581 230

Free funds
574 675 957

457 083 533

Income receipts
105 163 498

88 537 887

Capital investments

18 507 642

(100)
Total
2 940 303 883

1 689 078 481

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6.26 In 2010, Authorized Dealers made foreign currency payments amounting
to US$432.2 million and US$1.7 billion being exporters and non
exporters’ payments, respectively.

6.27 Receipts from the Diaspora amounted to US$263.3 million in 2010 as
compared to US$198.2 million in 2009, representing a 32.9% increase.
6.28 The growth rates primarily reflected the market’s confidence in the formal
channel of remitting free funds.
Exporters and Non-exporters Payments as from 01 January 2010
to 31 Dec 2010
FOREIGN CURRENCY REMITTANCES
Foreign Currency Receipts from the Diaspora
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January2011
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Foreign Currency Receipts form the Diaspora (USD million)

Source:

January

February

March

April

May

June

July

Aug

Sept

Oct

Nov

Dec

Total

Monthly Average

Year to year growth rate
79%
152%
33%
Bank Application System
6.29 In the outlook, the sector is poised to grow in 2011 due to the broadening
of the Bureau De Change operating framework. In addition to being
receiver agencies, effective 1 January 2011, Bureau De Change are
now able to transmit free funds outside the country.
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January2011
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7.
POLICY MEASURES TO CURB EXTERNALISATION OF
FOREIGN CURRENCY
Liberalised Exchange Control Framework
7.1 In line with the SADC Protocol on Liberalisation of Trade and Exchange
Controls and complemented by the introduction of the Multiple Currency
System beginning the last quarter of 2008, the Liberalized Exchange
Control Framework has come in the form of full Current Account
convertibility and free movement of foreign currency within the economy.
7.2 In order to cushion the economy from external shocks and guard against
capital flight, the Capital Account has not been fully liberalized. However,
investment income from inward investments is freely remittable.
7.3 The remaining restrictions on the Capital Account are being managed in a
manner that promotes investor confidence and facilitates and allows free
movement of capital.
7.4 As highlighted in the previous monetary policy statements, whilst the
Liberalized Exchange Control Framework has made significant progress
in boosting viability of local enterprises and investor confidence, it is
disheartening to note that, it has on the other hand, resulted in
externalisation of foreign exchange through various conduits.
7.5 In addition to policy measures announced in the previous Monetary
Policy, this Monetary Policy also seeks to review the existing
administrative and monitoring mechanisms with the objective of
curbing the externalisation of foreign exchange.
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Issuance of Exporter’s Registration Certificates
Extension of Credit Term Period for Exported Goods
7.6 Under the Liberalised Exchange Control Framework, the Reserve Bank
retains the role of ensuring that the country realises true and fair value of
its exports, as well as full accounting and ensuring timeous repatriation of
all the export proceeds.
7.7 In order to efficiently and effectively carry out this national duty, all
exporters of goods and services, who are registered with the Reserve
Bank, shall be issued with Registration Certificates.
7.8 The Exporter’s Registration Certificates shall be issued to all bona fide
exporters in the country and shall also be part of the selection criteria
requirement for the Exporter of Year Awards by the National Business
Associations.
7.9 As Monetary Authorities, we have noted with concern a trend where some
business entities and individuals have engaged in externalisation of
export proceeds by illegally keeping export earnings offshore and falsely
declaring that they have not been paid by their consignees.
7.10 ln order to curb this malcontent behavior, with immediate effect,
applications for Exchange Control Authority to extend credit term period
for exported goods must be accompanied by an authenticated agreed
payment plan between the exporter and the consignee.
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7.11 In order to ensure consistency with the liberalized framework, the
Reserve Bank allowed for the designation of different types of FCAs held
by corporates and individuals to facilitate the holding and transacting of
their foreign currency balances.
7.12
i) Corporate FCA (Exports) – for holding foreign currency proceeds from
export of goods and services.
ii) Corporate FCA (General) – for depositing foreign currency proceeds
emanating from commercial activities within Zimbabwe.
iii) Corporate FCAs (Transitory) - accounts used for purposes of holding
funds in transit and whose destination is not yet known or billing is yet to
be done.
iv) Corporate FCAs (Banks) - These are FCAs opened by financial
institutions licenced under the Limited Dealership Authority, with their
Managing Banks. Such FCAs are also used for handling the
institution’s foreign exchange transactions.
V) Individual FCAs - Include all FCAs held by individuals, such as
employees of Government, NGOs, Embassies, International
Organisations, private sector or any other individual holding ‘free
funds’. Funds deposited in these accounts are ‘free funds’.
vi) Non-Resident Transferable FCAs (NRTAs) - Accounts opened by
RE-DESIGNATION OF FOREIGN CURRENCY ACCOUNTS (FCAS)
The designated FCAs included:-
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Authorised Dealers on behalf of individuals who visit or come to
Zimbabwe on temporary visits or to settle and work in Zimbabwe during a
period less than 12 months. Authorised Dealers may also open such
accounts on behalf of non-resident corporates, under advice to
Exchange Control.
7.13 The designation of these FCAs was meant to create transacting flexibility
and ease of Balance of Payments reporting. However, the Reserve Bank
has noted with concern the abuse, of mainly, the FCAs General, which
has been used to hold large foreign currency balances, some of which
have been the subject of externalization ostensibly because such funds
were wrongly deemed “free funds”.
7.14 In order to ensure full accountability of all funds held by corporates, with
immediate effect, such funds emanating from commercial activities
within Zimbabwe and held by corporates are not to be deemed as ‘free
funds’.
7.15 Although the funds will continue to be deposited into the FCAs (General)
for accounting purposes, they shall be treated in the same manner as the
FCAs (Exports) and utilization of such funds for foreign payments must
be reported through the CEBAS system. Authorised Dealers are
mandated to ensure full compliance.
7.16 In terms of the designation of foreign currency accounts, FCA
(Exports) are only funded from proceeds from the export of goods and
services. There is, however, a tendency to transfer funds from the
FCA (General) to acquit export documentation (Forms
TRANSFER OF FUNDS FROM FCA (GENERAL) TO FCA (EXPORTS)
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CD1/CD3/TR1/TR2/GSD/PTS1).
7.17 In order to curb such malpractice, with immediate effect, the transfer of
funds from FCA (General) into FCA (Exports) shall not be allowed. Again
Authorised Dealers are obliged to ensure 100% compliance.
8.1 The maintenance of an efficient and robust national payments system
remains one of the major objectives of any Central Bank. The National
Payment Systems broadly remained stable and efficient during the year
2010. To this end, the Reserve Bank intensified its oversight function
through offsite analysis and onsite inspections of all payment streams.
8.2 RTGS system performed remarkably well since re-alignment to the
multicurrency regime. Increases in both volumes and values have been
experienced over the period. A cumulative total of 1,6 million transactions
valued at US$21.7 billion were processed through the RTGS system
during 2010, as compared to 678 thousand transactions valued at
US$6.7 billion in 2009.
8.3 There was a monthly average increase of 11 % and 19% from 2009 to
2010 transaction volumes and values respectively. This is not
withstanding the fact that RTGS operated for nine months in 2009.
8.4 The average number of transactions moved per day also increased by
61% percent in the year 2010 to 7 464 transactions compared to 4 646
8. NATIONAL PAYMENT SYSYTEMS OVERVIEW
LARGE VALUE PAYMENT SYTEMS
Real Time Gross Settlement System
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transactions, in the year to 2009.
8.5 The increases are attributed to the growing levels of confidence in the
RTGS system as a safe and efficient mode of payment for both high value
and time critical payments.
8.6 The figure below shows the comparative detail of activities within the
RTGS system during the years 2009 and 2010.

9.1 The activities of the inter-bank cheque system recorded a total of 174,403
cheques amounting to USD42.4 million, processed through the Harare
and Bulawayo Clearing Houses from January to December 2010.
RTGS Values and Volumes 2009 and 2010
9.
RETAIL PAYMENTS
Inter-bank cheque system
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Cheque volumes increased at a monthly average of 10%, while values
rose by 9%.
9.2 The figure below shows a gradual upward trend in cheque values and
volumes on a monthly basis from January to December 2010.

9.3 In line with economic trends, the Central Bank and Bankers Association
of Zimbabwe have resolved to review the cheque limits upward and new
limits will be announced in due course.
9.4 As Monetary Authorities we remind all players to observe sound risk
management practices and internal controls on an on-going basis. This is
meant to minimize risks associated with paper based payment
instruments.
9.5 The cumulative total of card transactions from January to November 2010
was 2.8 million amounting to US$304 million. Of this amount, ATMs
Card Payment System
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constituted 84%, while POS represented 16%.
9.6 Volumes and values of card based transactions increased at a monthly
average of 11% and 44% respectively during the period under review.
9.7 The Figure below illustrates that ATM values and volumes represent the
bulk of card based activity as compared to POS transactions during the
period under review.
9.8 Growth in ATMs value of transactions is attributed mainly to the sharing of
infrastructure by all commercial banks which has brought convenience
to the transacting public. However, the POS population remains limited
thereby constraining the widespread use of cards in the country.
POS AND ATMs VALUES AND VOLUMES FROM JANURY TO
NOVEMBER 2010
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9.9 In this regard, we call upon banks and other relevant stakeholders to
deliberately invest in POS infrastructure throughout the country so as to
promote the use of cards as an electronic payment mechanism.
9.10 A cumulative total of mobile and internet transactions of 457 513 valued at
USD193.13 million were processed from January to November 2010. Of
the US$193.13 million, internet transactions accounted for 99%, while
mobile payments were 1% of the same amount.
9.11 Mobile phone penetration in Africa has leapfrogged and Zimbabwe is no
exception with a subscriber base estimated to be over 5 million. This has
created an opportunity for banks and other players to leverage on
Information and Communication Technology developments.
9.12 Consistent with these developments, the Central Bank approved the
establishment of mobile phone banking initiatives in the country. This is
consistent with our goal to promote electronic payments and financial
inclusion.
9.13 We remain resolute in urging the financial services sector and other
stakeholders in the market to explore ways of furthering the utilization of
these communication tools as channels for retail payments on a large
scale across banks, borders and networks.
Mobile and Internet Payment Systems
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SECURITIES SETTLEMENT
10. REGIONAL AND INTERNATIONAL DEVELOPMENTS
9.14 The Securities Commission of Zimbabwe (SECZ) which is spearheading
the project to implement a central securities depository for equities has
now awarded a tender to a selected company to establish the system.
9.15 The Central Bank is working in collaboration with the Securities
Commission of Zimbabwe (SECZ) to implement a Securities Settlement
System (SSS) for equities.
9.16 In line with regional and international best practices it is envisaged that
the depository will be linked to the RTGS system to ensure delivery
versus payment (DvP).
10.1 During the period under review, the Reserve Bank continued to work
closely with both regional and international bodies. In this regard, the
Central Bank participated in payment systems Integration Projects for
SADC and COMESA. The REPSS (Regional Payment and Settlement
System) payment system Integration Projects for COMESA is at an
advanced stage of implementation whilst the SADC Project is still at its
initial stage.
10.2 The Central Bank also continues to closely cooperate with other central
Banks and bodies such as the International Monetary Fund, World Bank
and Bank for International Settlement on payment, clearing and
securities settlement issues and stand ready to further this collaboration
into the future.
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11. POLICY ADVICE
11.1 As part of its core deliverables, the Reserve Bank has and does continue
to profer advice to Government.
11.2 To this end, the Reserve Bank did offer various pieces of advice to
Government on the following issues:
(a)
Indigenisation and Economic Empowerment;
(b)
Politics and the Economy;
(c)
Agricultural sector support and the importance of mechanisation;
(d)
Parastatal reform;
(e)
Stabilization of the energy sector;
(f)
Local Authorities reform;
(g)
Skills retention;
(h)
Diaspora participation in the local economy;
(i)
Financial inclusion of the poor;
(j)
Industrial policy reforms and Investment Promotion;
(k)
Women and Youth Development Strategies;
(l)
Export-led development strategy; and
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(m)
The importance of alternative energy sources.
11.3 As Monetary Authorities, we encourage that those in relevant political
formations, Government Ministries, Public Enterprises and local
authorities take into account our modest recommendations with open
minds, so as to allow the virtues of objectivity to flourish.
12.1 Zimbabwe’s full recovery and return to the path of lasting prosperity
continues to be heavily constrained by the debilitating effects of the
illegal sanctions being imposed on the country.
12.2 The Reserve Bank continues to urge those responsible for the imposition
of the sanctions to please free us from this unjust handicap which is
negatively affecting not just the alleged targeted few, but the majority of
vulnerable Zimbabweans.
12.3 The promulgated tenets of fairness, justice and equality of all breeds of
humanity must be allowed to prevail through the removal of the illegal
sanctions on Zimbabwe.
13.1 Zimbabwe’s full recovery and growth prospects are bright.
13.2 Concerted efforts must be invested in cultivating the sustenance of a
conducive environment for the deepening of business and investor
confidence.
12. SANCTIONS
13. CONCLUSION
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13.3 Resurging inflationary pressures have to be fought through the unfailing
armoury of increased capacity utilisation across all productive sectors of
the economy.
13.4 Promotion of food security in the country must remain a non-negotiable
priority, given the multiple negative effects on the rest of the country’s
economic, social and political tentacles that emanate from instances of
food shortages.
13.5 The Reserve Bank, which has successfully realigned its operational
structures, remains committed to fully discharging its statutory mandate.
13.6 I commit this Monetary Policy Statement in God’s hands.
Thank you.
DR G. GONO
GOVERNOR
RESERVE BANK OF ZIMBABWE
January 2011
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