Firms grapple with RBZ’s currency reporting directive

LIVINGSTONE MARUFU

Several companies are increasingly struggling to comply with a recent directive by the Reserve Bank of Zimbabwe (RBZ) requiring all listed companies to publish their financial statements in Zimbabwe Gold (ZiG).

This new requirement, implemented amid efforts to shore up confidence in the rebranded local currency, has caused a flurry of delays in financial reporting, particularly from companies with United States dollar (US$) as their functional currency.

Over the past few weeks, more than 10 companies listed on the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) have delayed the publication of their annual financial results for the year ended 31 December 2024 citing complications arising from the mandatory translation of US$-denominated financials into ZiG — a process companies say distorts critical financial metrics and undermines the integrity of their reporting.

While several firms have managed to meet the new reporting obligations, they admit that doing so has come at a considerable cost, both in terms of time and audit complexity.

Many warn that the translated figures may not accurately reflect their operational realities, thereby raising concerns over the reliability of financial statements now being issued in the ZiG currency.

First Mutual Holdings Limited (FMHL) was among the first to formally notify the market of its challenges. Company secretary Sheila Lorimer noted that the delay stemmed from the requirement to comply with a technical paper issued by the Public Accountants and Auditors Board (PAAB). The directive mandates the preparation of two sets of financial reports — one in the US$ and another in the presentation currency (ZiG), with both requiring external audits.

“The delay has arisen from the requirement to comply with the recently issued Public Accountants and Auditors Board technical paper on financial reporting and auditing, which stipulates that where a company’s general purpose financial statements are in United States dollars, special-purpose financial statements must also be prepared in Zimbabwe Gold (ZiG). The translated special-purpose financial report must be audited. As FMHL’s auditors have indicated that the ZiG special-purpose financial statements represent a separate mandate, this has resulted in some delays,” Lorimer explained.

Following an application, the ZSE granted FMHL an extension, allowing the company to publish its full-year financials by 30 April 2025.

FMHL’s subsidiary, First Mutual Properties Limited, also issued a notice of delay.

Company secretary Dulcie Kandwe echoed the sentiment, describing the dual reporting requirement as a “complication” that has necessitated additional time for finalising the audit processes.

“The extension allows for the finalisation of audit opinions on both the US$ functional currency (general purpose) financial statements and the ZiG presentation currency (special purpose) financial statements,” Kandwe stated.

First Capital Bank, the first commercial bank to be listed on the Victoria Falls Stock Exchange, also faced difficulties in adapting to the dual-currency audit framework.

Company secretary Sarudzai Binha confirmed the delay, citing the additional technical work required to adjust to the change in presentation currency.

“The delay is due to the additional time required to incorporate technical work associated with the change in functional currency, as well as the dual audit process relating to the USD functional currency and ZiG presentation currency,” Binha said.

Hospitality group African Sun Limited, another VFEX-listed firm, also delayed its financials for the year ended 31 December 2024.

Company secretary Venon Musimbe attributed the delay to extended audit procedures and confirmed that the company had received approval to publish its results by 30 April 2025.

Similarly, Zimre Holdings Limited (ZHL) announced its inability to meet the 31 March 2025 reporting deadline due to issues related to the consolidation of financial statements for its subsidiary, Fidelity Life Assurance of Zimbabwe.

“As a consequence, the group missed the 31 March 2025 publication deadline of its 31 December 2024 financial statements. The company shall publish the statements on or before 15 April 2025, which leave has been granted by the Zimbabwe Stock Exchange,” said company secretary Ruvimbo Chidora.

The wave of publication delays has stirred debate within the financial and investment community about the feasibility and prudence of the RBZ’s directive.

Critics argue that the policy may ultimately compromise the quality of financial reporting, introduce regulatory and compliance risks, distort asset valuations, and erode investor confidence.

At the heart of the controversy is the question of functional currency.

Under International Accounting Standard (IAS) 21, an entity’s financial statements must be prepared in its functional currency — defined as the currency of the primary economic environment in which the entity operates.

For many Zimbabwean corporates, particularly those in the retail, financial services, and tourism sectors, the US$ remains the predominant currency of revenue and expenditure. As such, the US$ qualifies as their functional currency under global financial reporting standards.

The forced translation into ZiG for reporting purposes, experts argue, could misrepresent business fundamentals.

Tafara Mtutu, an investment analyst at Morgan & Co, said the directive was ill-timed and posed a real threat to financial transparency.

“This move is premature,” Mtutu said.

“If the currency destabilises, it defeats the purpose of financial reporting, which is to provide an accurate reflection of business performance. Since most revenues are in U.S. dollars, financial statements in ZiG could misrepresent company performance.”

He further noted that key financial indicators — such as profit margins, asset valuations, and debt ratios — could be significantly distorted when translated into a currency that is not reflective of the business’s operational environment.

Institutional investors, both local and foreign, rely heavily on financial statements to assess risk, value assets, and make informed decisions.

Analysts warn that distorted reporting could deter investment at a time when Zimbabwe is desperately seeking capital inflows to support its economic recovery.

“International investors already approach Zimbabwe with caution due to currency volatility and regulatory uncertainty,” said one portfolio manager at a regional investment firm.

“Mandating financial reporting in a currency that has no proven track record could exacerbate those concerns.”

Audit firms have also been placed under pressure. The need to perform dual audits — one in US$ and another in ZiG — has increased workloads, strained timelines, and raised audit fees for corporates. Several auditing professionals interviewed noted that the PAAB directive lacks sufficient clarity, further complicating the audit process.

“We are in uncharted territory,” said one senior auditor from a Big Four firm.

“The frameworks for valuing assets and liabilities in ZiG are still evolving, and without a stable reference point, it’s difficult to sign off on these reports with the same level of confidence as we do with US$-based statements.”

The ZiG currency was introduced as part of the RBZ’s broader currency reform strategy aimed at stabilising inflation, enhancing monetary credibility, and reducing reliance on the greenback. Marketed as a gold-backed digital currency, the ZiG was positioned as a potential anchor for long-term macroeconomic stability.

However, economists say its success hinges on widespread acceptance, which cannot be engineered through administrative fiat alone.

The push to enforce ZiG-based financial reporting has opened a new fault line between Zimbabwe’s monetary authorities and the private sector.

While the RBZ views the directive as part of a broader strategy to entrench the ZiG, businesses argue that it introduces unnecessary risk, undermines international best practices, and could ultimately hurt the very investment confidence Zimbabwe is seeking to build.

With the audit season still underway and extensions being granted across the board, it remains to be seen whether the policy will hold — or whether practical business realities will force a rethink.