AB InBev, which sees its dividends and fees trapped in Zimbabwe has invested earlier this month more than $120 million in the central bank’s savings bonds. Delta Corporation, the country’s leading brewer in which AB InBev owns a 40 percent stake, confirmed that “AB Inbev has agreed to place more than US$120 million due to them in relation to unremitted dividends and fees into RBZ (Reserve Bank of Zimbabwe) savings bonds in order to reduce the pressure on the demand of foreign currency.” The bonds were introduced in September 2017 and have a coupon of 7 percent and a tenure of between 12 and 60 months.
About a decade ago Zimbabwe scrapped its own currency to end hyperinflation. As a substitute the central bank adopted a basket of currencies and issued bond notes and an electronic currency known as RTGS$. However, the new system has caused foreign currency shortages because the underlying problem, depressed export productivity, poor foreign direct investment inflows and lack of international financial support, was not resolved.
The crisis has caused shortages of everything in the country from fuel to bread, much of which is imported. This month many Zimbabweans took to the streets to protest worsening living conditions and soaring prices. At least a dozen people were killed and another 78 wounded by gunfire when security forces tried to fight back the protesters.
In order to calm the situation and to dry up the black market and the use of cash dollars, the government in Zimbabwe said on Monday it will now allow companies and individuals to transfer dollars electronically. “This is a small but important step in a long process of normalizing the monetary system in the country, which has become significantly dependent on the parallel market for goods and services payments,” Chiedza Madzima, a senior analyst at Fitch Solutions in Johannesburg was quoted by Bloomberg.
The new measure will most likely also help AB InBev to free its money at the central bank, although part of the money is still needed to provide for the importation of raw materials. Of the US$120 million, which AB InBev has invested in saving bonds, about $95 million is unremitted dividend and the balance caters for fees and other charges, Delta’s company secretary Alex Makamure told Business Times. However, he is also sure that “AB InBev has supported Delta through credit lines for the importation of raw materials since access to foreign currency became limited and continues to provide this support.”