The Reserve Bank of Zimbabwe says it allows for companies operating in Zimbabwe to partially externalise their shareholding, but warned it will enhance monitoring mechanisms to ensure that the dispensation is not abused.
Companies are increasingly looking at migrating their holding company structures or part of their equity to offshore jurisdictions with benefits including easier access to venture capital.
And certain foreign investors may allocate a greater portion of their available funds for investments in jurisdictions prominent in specific industries.
Although the dispensation is commonplace around the world, the RBZ governor Dr John Mangudya, said locally it had been necessitated by the high country risk.
“Because of the high country risk in Zimbabwe, some firms in the country, not only ICT companies, have opened subsidiary companies outside Zimbabwe so that they can raise capital for Zimbabwe.
“Some have gone to Mauritius, others are listed on the Johannesburg Stock Exchange (JSE) and others on the London Stock Exchange’s Alternative Investments Market (AIM) with the idea of raising money on the foreign exchanges to bring money to Zimbabwe. Other companies are dual listed, for instance Old Mutual.
“On the same note we know of some entities that have externalised their shareholding, but not the money. By so doing it’s similar to opening a firm in Mauritius, for example, so that they can leverage to get money into Zimbabwe,” the Governor told a Parliamentary Portfolio Committee on ICTs this week.
“Whether or not it has been helpful, all I can say is where foreign currency has come into the country because of such activities, we do not have a problem. But where activities are such that they are used for externalising funds from Zimbabwe, it can become a challenge and we will investigate accordingly.”
Relatedly, the RBZ has said it is privy to payments made by Government to a foreign shareholder of Telecel Zimbabwe, although there is still a balance outstanding.
“On the Telecel issue we are aware of the transaction wherein Government was paying an amount of around US$40 million of the shares to a foreigner.
“Some of the amount was paid and there is a balance due to the foreigner,” he said.
In November 2015, Amsterdam-headquartered telecoms giant VimpelCom agreed to sell its controlling stake in Telecel Zimbabwe to the Government for $40 million.
At the time VimpelCom, owned 60 percent of Telecel Zimbabwe.