eBusiness Weekly
Tawanda Musarurwa
Government has moved to empower the country’s insurance and pensions regulator, the Insurance and Pensions Commission (IPEC) to collect levies in foreign currency.
This week, the authorities promulgated Statutory Instrument 268 of 2020, Exchange Control (Exclusive Use of Zimbabwean Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No.3) which amends part of the Exchange Control Act.
SI 268 of 2020 reads: “Section 4 of the Exchange Control (Exclusive Use of Zimbabwe
Dollar for Domestic Transactions) Regulations, 2019, published in Statutory Instruments 212 of 2019, is amended in paragraph (b) by the insertion, after subparagraph (vi), of the following subparagraph—
“(vii) charging of any levy payable in relation to insurance business conducted in foreign currency or pension and provident funds business whose contributions are made in foreign currency in terms of an enabling law or authorisation by the exchange authority;”.
SI 268 comes ahead of an expected amendment in the regulations that will allow insurers and pension funds to write business in foreign currency.
Earlier this year, IPEC commissioner Dr Grace Muradzikwa, said the Commission was being inundated with requests from companies and pension fund to issue United States dollar-denominated policies.
“We have seen a high demand for US dollar-denominated policies. Almost on a daily basis the Commission is having to review and assess applications for US dollar policies,” said Dr Muradzikwa recently.
“And this is really speaking to product relevance and the low confidence levels that the industry is currently experiencing.”
The local pensions and insurance industry, like most businesses in the country, has been struggling with the attendant effects of a raft of monetary and fiscal policy changes over the last couple of years, but particularly from last year.
The country reverted to the exclusive use of the Zimbabwe dollar last June from a multi-currency system that had been adopted in 2009.
The Zimbabwe dollar was re-introduced through Finance Act No.2 of 2019 and Statutory Instrument 212 of 2019, which provides for exclusive use of the Zimbabwean dollar to settle all domestic transactions as well as penalties for failure to do so.
But adjustments have since been made to allow for US dollar transactions, alongside the Zimbabwe dollar, through Statutory Instruments 85, 185 and 196.
