ZIMBABWE’S nostro premiums have dropped from average 60 percent to about 25 percent as a result of improved exports, Diaspora remittances and foreign direct investment, an official has said.
Speaking after a recent investment conference in London, Reserve Bank of Zimbabwe Deputy Governor, Dr Kupukile Mlambo, said improvement in the liquidity situation was hinged on harnessing Diaspora remittances and increasing exports. For the past three years Zimbabwe’s Diaspora earnings have been averaging $1 billion per annum, according to official records.
Dr Mlambo said the cash situation was improving gradually due to improved exports spurred by bond notes and nostro stabilisation measures put in place by the central bank.
“The premiums on foreign money on the nostros have actually narrowed considerably in the last few weeks. One time it was going over 60 percent but now it’s between 25 and 35 percent or 40 percent,” he said.
“The more Zimbabweans from outside bring in their dollars the less we have a problem with cash. As long as we are dollarized, we have to increase our exports, we are targeting those areas that generate foreign currency. If more Diasporas and investors come, the cash challenge will be solved because people come with their US dollars and that is what brings the liquidity we need.”
The London conference brought together influential business leaders and investors from the United Kingdom and Europe to deliberate and discuss investment opportunities in Zimbabwe. It was organised by Consolidated African Services (CAS) Ltd, a Zimbabwe and UK-based multi-sectoral company.
Dr Mlambo’s remarks come at a time when the central bank has introduced a raft of measures to increase exports and improve foreign direct investment into the country. To ensure the competitiveness of Zimbabwe’s exports, the Central Bank established the $200 million and $300 million export incentive facilities, which are monetised by bond notes. As part of efforts to attract Diaspora investments, the RBZ in the 2018 monetary policy statement announced several measures such as allowing Zimbabweans abroad to open investment accounts with local banks.
In order to enhance foreign currency inflows from tobacco and gold production, the tobacco input finance facility has been increased from the $28 million disbursed last year to $70 million while the gold support facility has been increased from $74 million last year to $150 million this year.