BY MELODY CHIKONO
INTERNATIONAL banks have queried the central bank’s directive to shift payment of commissions for mineral exports to the Zimbabwe Revenue Authority (Zimra) from Minerals Marketing Corporation of Zimbabwe (MMCZ), saying without legal support, the change places them at odds with regulators, documents obtained by the Zimbabwe Independent indicated this week.
Until May this year, requisite fees and commissions due to the state were transmitted through the MMCZ.
But under swift changes effected by the Reserve Bank of Zimbabwe (RBZ), financial institutions are now compelled to transmit them to Zimra.
Correspondence between banks and the Ministry of Finance obtained by the Independent said foreign banks want Zimbabwe’s government to play by the book and help them avoid being hit with heavy penalties for violating established crossborder systems.
In the paper that spells out banks’ proposals for the 2022 national budget, the Bankers Association of Zimbabwe (BAZ) said legalising the policy would give correspondent banks assurance that the Government of Zimbabwe was behind the policy change.
Correspondent banks provide services to other banks, usually those in other countries, acting as intermediaries or agents, facilitating wire transfers, conducting business transactions, accepting deposits and gathering documents on behalf of others.
Such banks are most likely to be used by domestic banks to service transactions that either originate or are completed in foreign countries.
“Public notice number 56 of 2021 reference ‘deduction and payment of mining royalties’ issued by Zimra provides that with effect from 27 May 2021, financial institutions must deduct mining royalties from payments received in relation to exports of minerals by the mining companies,” BAZ said in the paper.
“Similarly, exchange control…provides that the mining royalties deducted, shall be remitted to Zimra by crediting the respective business partner’s royalties contract account of the mining company or person receiving the export proceeds and that these amounts should be remitted to Zimra. Whilst we acknowledge that the above change in operational modalities allow for payment of these dues to Zimra, we continue to face challenges with respect to the same with correspondent banks. We have observed that MMCZ continues to participate in the preparation of CD1 documentation and invoicing.
“Due to the listing of MMCZ as a specified designated entity in material jurisdictions, and the requirement of correspondent banks to comply with legal sanctions obligations in their regulatory context, we propose that the specification to remit these dues to Zimra, be promulgated as law. This will provide the correspondent banks with a legislative framework to seamlessly process the related telegraphic transactions and allow them to provide empirical evidence to their regulatory stakeholders that these transactions will be carried out within the confines of their laws,” BAZ added.
The MMCZ is one of several key Zimbabwean firms that have been included in a global embargo meant to punish Harare’s elites for a string of alleged human rights violations.
This week’s development is the latest in a series of events demonstrating how the southern African country has been badly hit by Western-imposed sanctions, which have recently attracted rebuke from the Southern African Development Community (Sadc).
Last week, a United Nations special envoy called on the United States of America and the European Union (EU) to consider lifting the sanctions, which have been estimated by Harare to have cost the country about US$100 billion in potential earnings in the past 20 years.
But the EU maintained that the global embargo was only targeted at a few elites that have been blamed for high level corruption, electoral fraud and human rights violations.
In an interview with the Independent, last week, EU ambassador to Zimbabwe Timo Olkkonen said the restrictive measures would only be lifted after an assessment of the situation in Zimbabwe by the bloc’s council.
The top diplomat spoke as UN special rapporteur Alena Douhan concluded a 10-day tour of the country on Wednesday, after which she slammed Western powers for the devastation that the global embargo has caused.
Government has claimed the decimation of Zimbabwe’s currency, hyperinflation, foreign currency shortages and deteriorating living standards on the measures, which came after concerns over alleged rights abuses and electoral fraud.
Olkkonen said while there had been a move towards enacting laws to improve the human rights situation in Zimbabwe, the EU was worried that Zimbabwe had moved too slowly to implement them.
“The question is on the proof that these consequences (suffering) are there. So far, we haven’t seen any proof as regards to EU restrictive measures affecting the people,” he said.