THE Reserve Bank of Zimbabwe (RBZ) has cut export retention proceeds by another 5% and ordered local authorities to not to issue licences to informal traders without bank accounts.
This comes amid a decline in foreign currency circulation as the market is holding on to money due to the exchange rate volatility.
The exchange rate volatility is being caused by the struggling Zimbabwe Gold (ZiG), which remains the functional and reporting currency, while the economy is dollarising.
The volatility of the exchange rate is evidenced by the United States dollar month-on-month inflation rate rising by a whopping 10,9 percentage points to 11,5% last month.
In his 2025 Monetary Policy Statement yesterday, RBZ governor John Mushayavanhu announced additional measures to shore up foreign currency reserves.
“In order to guarantee continued stability in the interbank foreign exchange market through augmenting the supply of foreign currency, as well as building the critical foreign currency reserves needed to anchor the ZiG, the foreign currency retention level for exporters has been reduced from 75% to 70%, with immediate effect,” Mushayavanhu said.
“This implies that the effective surrender portion of export proceeds has been increased from 25% to 30%.
This review is consistent with the increased use of ZiG in the economy.
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“The additional 5% will ensure that exporters mobilise sufficient ZiG to meet local currency obligations and other expenses, including tax payments, going forward.”
He said in order to ensure the preservation of value, exporters with no immediate use of the ZiG equivalent of the additional 5% of the export surrender proceeds would have an option to invest the funds in a US dollar-denominated deposit facility.
However, the facility will be kept and controlled by the RBZ.
Mushayavanhu further ordered that banks and payment system providers, with immediate effect, to ensure that every business account, new and existing, is issued a point-of-sale (POS) machine or any other approved digital mechanism.
Such mechanisms, he added, should facilitate transactions in both ZiG and US dollars.
“Any dormant POS machines or digital transactional gadgets should be imported to the reserve bank toll-free line, and we will deal with it accordingly,” Mushayavanhu explained.
Banks should also monitor inactive POS machines and investigate why they are not being used to carry out transactions.
“Banks have good mechanisms of seeing any POS machine which is not transacting and we then want to find out why that ZiG point-of-sale machine is not transacting when you are supposed to be in business,” Mushayavanhu said.
“Also, to promote the use of non-banking channels on all domestic trading transactions, the Reserve Bank further advises all local authorities and other licensing entities to ensure that all applicants for trading licences, whether individuals or corporates, have a bank account and a functional POS machine at the point of licensing or renewal.”
He added: “If you don’t have a bank account and you don’t have a POS machine, your licence will not be renewed.”
The RBZ boss said whether one was “a trader, a bottle store owner or whatever”, the licence would not be renewed.
“And we are going to enforce that through the licensing authorities,” Mushayavanhu exclaimed.
A study undertaken by the central bank in 2022 found that the informal sector is estimated to generate an annual turnover of US$14,2 billion, for a US$8,6 billion gross domestic product valuation.
The central bank has also estimated that there is about US$2,5 billion circulating at any given time within the informal sector.
To encourage increased usage of foreign currency, it was also announced that POS transactions for amounts less than US$5 or its equivalent in ZiG are exempted from transaction charges.
The need for more foreign currency comes as reserves of gold and foreign currency have increased by about 90% to around US$550 million (ZiG14,3 billion) as of the end of January 2025, from US$285 million in April 2024.
According to the RBZ, this provides more than three times cover for the reserve money of ZiG3,5 billion.
Compared to the amount of foreign currency being generated in the informal sector, however, the amounts in the formal sector are insignificant.
