TOTAL overdue export receipts stood at $251,6 million as at Friday last week representing 5,8 percent of the total export receipts for 2013.Figures obtained by The Herald Business from the Reserve Bank of Zimbabwe show that total export receipts for last year amounted to $4,2 billion, but some companies are yet to remit export earnings, a situation that has compounded the country’s prevailing liquidity constraints.
Exporters are required to repatriate proceeds 90 days from the date of export. Deputy Reserve Bank of Zimbabwe governor Dr Kupukile Mlambo said stringent controls must be introduced to deter exporters from withholding export earnings.
Contributing at a discussion on the liquidity crunch last week Thursday, Dr Mlambo said the National Economic Conduct Inspectorate and the central bank were investigating various exporters with overdue export receipts.
“There is need to charge harder those exporters that do not meet remittance deadlines. (However), details of individual exporters with overdue export receipts cannot be made public as such companies are at various stages of follow ups and investigations by both the Reserve Bank and the national Economic Conduct Inspectorate,” said Dr Mlambo.
An RBZ Exchange Control Flagging Framework for Exporters shows that overdue accounts for 121-180 days or overdue amount between $100 001 and $150 000 are classified under red category and attract a fine of $75 or 2 percent of export value of the Form CD1 being raised, whichever is greater.
Accounts classified as purple which fall between 181-365 or $150 001 to $500 000 attract a fine of $150 or 3 percent of export value of the Form CD1 being raised, whichever is greater.The class that worries the central bank most is the black flag for accounts that fall 366 days and above or more than $500 000. These attract $250 or 5 percent of export value of the Form CD1 being raised, whichever is greater.
The central bank introduced the administrative penalties in order to curb the continued externalisation of export proceeds and improve market liquidity.
The main reason for exporters with long overdue export receipts is that these exporters externalised their export receipts during the period 2005 to 2009. Such cases are being handed over to NECI in batches for investigation and possible prosecution, according to the central bank.
Dr Mlambo said the central bank is working closely with the Ministry of Finance and Economic Development in reviewing the regulatory framework.
The major elements of the proposed banking Amendments include; criminal as well as civil liability for any shareholder, director and senior manager found to have acted negligently or fraudulently. The amendments also cover fit and proper assessment framework and registration of bank holding companies.
“The amendment will also deal with the complex holding structures. It allows us also to supervise not just the subsidiary bank but also the holding company if it has financial implications,” said Dr Mlambo.
Dr Mlambo said that there is a problem with corporate governance especially in the financial sector. Sometimes we find a bank being a holding company or the bank being a subsidiary of a holding company where management practices regulatory arbitrage.
“We have situations where we have complex shareholding companies and management and the owners practice regulatory arbitrage. To make sure we close that loophole we are putting in place new regulations in corporate governance,” said Dr Mlambo.
Regulatory arbitrage is a practice whereby firms capitalise on loopholes in regulatory systems in order to circumvent unfavourable regulation.