Econet Seeks To Recover $13, 7b Exchange Rate Losses

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By Alois Vinga

ECONET Wireless Zimbabwe (EWZ) is engaging state authorities as it seeks to recover $13, 7 billion exchange rate losses when the economy adopted the Zimbabwe dollar as the sole legal tender in 2019.

In an update on the group’s performance for the year ending February 2021, EWZ chairperson James Myers said the losses being pursued were incurred due to past policy shifts.

“The group incurred exchange losses amounting to $ 13, 7 billion emanating from foreign currency-denominated obligations which largely accrued before the promulgation of Statutory Instrument (S.I.) 33 of 2019,” he said.

The policy directive, Statutory Instrument (S.I.) 33 ordered the transacting public to use the Zimbabwe dollar as the sole legal currency among other things from the effective date of 22 February 2019 for accounting and other purposes.

However, the central bank agreed to settle US$ company balances meant for foreign obligations which were sitting in their bank accounts at the time.

“The group lodged with the RBZ foreign obligations legacy debts accrued at 22 February 2019 in line with RBZ directives RU102/2019 and RU28/2019. Management continues to pursue the registration and settlement of the legacy debt on a 1 to 1 basis by the RBZ,” said EWZ.

The efforts come at a time when the RBZ has since settled foreign currency obligations under blocked funds for several companies which were affected by policy directives.

Cement maker, PPC Zimbabwe, last month acknowledged receipt of US$11, 2 million from the RBZ under the legacy debts repayment facility.

Beverages manufacturer African Distillers Limited (Afdis) recently paid US$22.5 million to the South Africa-based partner, Distell Limited under the same facility.

Meanwhile, during the period under review, EWZ revenue increased to $35 billion, an increase of 23% from the previous year, largely due to the increase in data usage, which increased by 47%.

Improving operational efficiencies and continued cost containment measures yielded positive results which saw the earnings before interest, taxation, depreciation, and amortisation (EBITDA) margin increase to 52%.

The company also concluded an agreement to dispose of its beverages bottling and other related assets held by Mutare Bottling Company (Private) Limited, a subsidiary of Delta Beverages.