Export incentives introduced by the Zimbabwean government in May 2021 appear to be paying off, as the available statistics point to growth.Through the incremental export incentive scheme, exporters are able to retain 80% of their qualifying foreign currency receipts.Exporters licensed under the Special Economic Zones and listed on the Victoria Falls Stock Exchange had their retention percentage increase from 60% to 100%.Announcing the incentives, finance minister Mthuli Ncube introduced a scheme to encourage gold production and deliveries to the state-owned Fidelity Printers and Refiners (FPR).Gold producers who deliver quantities above their average monthly deliveries can retain 80% on the incremental portion of the gold delivered to FPR.In a circular announcing the incentive, the Reserve Bank said the objective was to boost productivity by firms currently engaged in exporting, as well as incentivising others to start exporting.Companies that do not meet the requirements have to surrender 40% of their foreign exchange proceeds for local currency at the official exchange rate.The percentage was increased from 30% to 40% in January 2021.However, a regulation which forced companies to liquidate unutilised export proceeds after 60 days or risk having them sold in the Reserve Bank of Zimbabwe foreign exchange auction, was dropped.There is strong lobbying by business for the retention threshold to be reviewed.The Confederation of Zimbabwe Industries says the 60% companies can retain in US dollars is not sufficient to meet the costs associated with the development of export markets. In a draft paper to government titled “2022 Budget Statement Issues from Industry”, the confederation recommends that surrender requirements be reduced to 20%.
