Bank of Zambia

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Bank of Zambia Balance of Payments Monitoring Guide (2013)
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Bank of Zambia Balance of Payments Monitoring Guide (2013)
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Document Information
AUTHOR Bank of Zambia
VERSION 3.00
PROJECT Balance of Payments Monitoring
STATUS Work in progress In Review Approved

SUPPORT DOCUMENTS USED

1. Statutory Instrument No. 55 of 2013 (Balance of Payments Monitoring Regulations)
2. Bank of Zambia Amendment Act of 2013
3. Bank of Zambia Act 1996 Section 57
4. Study Tour Report Tanzania
5. Study Tour Report South Africa
6. Study Tour Report Namibia



SOURCE OF AUTHORITY

1. The Ministry of Finance

2. Bank of Zambia Board








TABLE OF CONTENTS
1.0 Purpose .................................................................................................................................................. 4
2.0 Transaction thresholds .......................................................................................................................... 4
3.0 Transactions to be monitored ................................................................................................................ 4
3.2 Inflows to be monitored ............................................................................................................... 5
3.3 International Transactions ............................................................................................................ 5
4.0 Foreign currency denominated accounts for exporters ......................................................................... 6
5.0 Foreign currency denominated accounts for foreign investors ............................................................. 6
6.0 Export Monitoring Form I..................................................................................................................... 7
7.0 Import and Remittance Monitoring Form II ......................................................................................... 8
9.0 Export/Import Acquittal Process ........................................................................................................... 9
10.0 Modes of payments for Imports and Exports ........................................................................................ 9
11.0.Returns by Registered Commercial Banks to the Bank ...................................................................... 10
12.0 Payments of dividends, royalties and management fees etc. .............................................................. 10
12.1 Dividends .................................................................................................................................... 10
12.2 Royalties and Management Fees. ................................................................................................ 11
13.0 Private External Borrowing/Lending Registration Form III ....................................................... 11
14.0 Record of Loan Agreements ............................................................................................................... 12
15.0 Reporting Requirements by Financial Service Providers ................................................................... 13
16.0 Applicability of Anti-Money Laundering Measures/Combating of Financing of Terrorism ............. 13
17.0 Adherence to existing import and export procedures ......................................................................... 13








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Bank of Zambia Balance of Payments Monitoring Guidelines (2013)
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1.0 Purpose

Statutory Instrument No. 55 (SI 55), Bank of Zambia (Monitoring of Balance of
Payments) Regulations, 2013 empowers the Bank of Zambia (the Bank) to put in place
the balance of payments monitoring frame work.
As part of the framework, the Bank has issued this guide to assist in the effective
implementation SI 55 which comes into effect on 1
st
July 2013. In particular the
following stakeholders will be critical to the implementation process; financial service
providers, Zambia Revenue Authority (ZRA), Zambia Development Agency (ZDA),
exporters, importers, foreign investors and any other person receiving or remitting
foreign currency.
2.0 Transaction thresholds

The Regulations shall apply to all transactions with a threshold of, or exceeding, twenty
thousand United States Dollars or the equivalent in any foreign currency for importation
or exportation of goods and services. The regulations shall also apply to dividends,
royalties, management fees, technical fees, commissions, consultancy fees, Government
securities maturities and other related transactions, regardless of the applicable thresholds
referred to above. All transaction stated above shall be processed through a registered
commercial bank.
3.0 Transactions to be monitored

The Regulations empower the Bank to take measures to monitor all inflows and outflows
of foreign exchange and all transactions relevant to the countrys balance of payments.
3.1 Outflows to be monitored

In line with the SI 55, the Bank will in relation to outflows, monitor the following
transactions:

a) The value of imported goods;
b) The value of any imported services, including management services;
c) Any amounts remitted out of Zambia whether unrequited (gratuitous
1
) or otherwise;
d) The amounts, if any, deposited abroad but generated by a person resident in Zambia
from the supply of goods produced or services rendered in Zambia;
e) Loans granted to non-residents;
f) Trade credits from non-residents;
g) Investments made in the form of equity outside Zambia by persons in Zambia;
h) Investments made in the form of debt securities outside Zambia by persons resident in
Zambia, and,
i) Payment of both principal and interest on private external debt.
3.2 Inflows to be monitored

In relation to inflows, the Bank shall monitor the following:
a) The value of goods or services exported out of Zambia;
b) Profits or dividends received in respect of investments abroad;
c) Borrowings from non-residents;
d) Trade credits to non-residents;
e) Investments in the form of equity from abroad;
f) Investments in the form of debt securities from abroad; Receipt of both principal and
interest on loans to non-residents;
g) Any other remittances into Zambia from abroad, and,
h) Receipts of both principal and interest on loans to non-residents.
3.3 International Transactions

In addition, the Bank of Zambia shall monitor the following international transactions;
a) The value of imported or exported manufacturing services or goods from or to
non-residents;
b) The net cost effect of telecommunication services;
c) The value of international transport, courier and postal services;

d) Value of accommodation and other hospitality services to or from non-residents;
and

1
For example a gift
e) International money transfers into and out of Zambia.
4.0 Foreign currency denominated accounts for exporters

SI 55 requires all registered commercial banks to facilitate the opening of foreign
currency denominated accounts in respect of all exporters for receipt of export proceeds.
Any person that engages in exports of goods and services shall be required to open a
foreign currency denominated account for receipt of export proceeds. If an entity has an
existing foreign currency denominated account, it may not be necessary to open another
foreign currency account.
5.0 Foreign currency denominated accounts for foreign investors

5.1 A foreign investor who acquires incentives under the Zambia Development Agency Act
(2006) shall be required to open a foreign currency denominated account with a
registered commercial bank in Zambia through which the cash component of the pledged
investments into Zambia shall be received.
For purposes of complying with SI 55, a registered commercial bank shall collect the
following documents in addition to the usual documentation required for the purpose of
conducting customer due diligence at account opening stage;
a) An investment license;
b) Evidence of the pledged capital for the investments; and
c) Evidence of nationality of the promoters.
5.2 In circumstances, where an investor staggers the pledged capital for investments over a
period of time, the financial service provider shall ensure that each time a deposit is
received; the investor reports to the Bank through the ZDA for the purpose of monitoring
inward flow of investment pledges.
5.3 Where a foreign investor brings in capital in form of equipment/machinery, the investor
shall submit through the ZDA, a customs certified report of the monetary equivalent of
the equipment/machinery to the Bank for monitoring inward flow of investment pledges.
5.4 In cases where a foreign investor pledges intangible forms of capital such as technical
skills, inventions or other forms of innovations, a foreign investor shall be required to
quantify these in monetary terms for the purpose of acquitting the transactions, through
the ZDA. The guiding principle will be to consider the cost that the foreign investor
would have paid for the services, inventions or technical skills if they were to be
outsourced.
6.0 Export Monitoring Form I

6.1 The Export Monitoring Form I to be completed by all exporters, in respect of any
proposed exports of, or exceeding, twenty thousand United States Dollars (USD20,000)
or the equivalent in any foreign currency shall be made available on the Bank website
and the websites of all financial service providers for ease of access by exporters.
6.2 In respect to the value of exports, the exporter will complete the Export Monitoring Form
on the basis of the known price estimates at the time of the export. An exporter will be
required to complete four (4) copies of the Export Monitoring Form which shall be
distributed as follows:
a) a copy shall remain with the financial service provider;
b) The exporter will take three copies to accompany the goods being exported. After
verification by the Zambia Revenue Authority at the port of exit, the exporter
shall retain a copy and leave two copies with the Zambia Revenue Authority. The
Zambia Revenue Authority will retain one copy and send one copy to the Bank.

6.3 The financial service provider shall be required to check that all required fields in the
Export Monitoring Form I are completed and verify the correctness and completeness of
the exporters account details prior to stamping and signing the Form. The exporter shall
be held accountable for any false declaration of Form I.

6.4 For transactions such as receipt of funds, recipient shall submit completed Form I in
duplicate to their respective FSP, attaching all relevant documentation. FSP shall scan
and email a copy of the funds recipients completed Form to the Bank of Zambia using
the email address: monitoringbalanceofpayments@boz.zm
6.5 Where an exporter receives advance payments before the goods are exported or the
services are rendered, the exporter of goods or services will complete the Export
Monitoring Form at the time of receipt of the inward funds into the foreign currency
denominated account.

6.6 An exporter will complete a separate form for each invoice amount to be acquitted in its
own right. Where separate advance amounts are made, the exporter or service provider
will be required to indicate the total invoice amount on the Export Monitoring Form
against which the various advance payments will be acquitted.

6.7 Where an exporter makes several exports but receives a single invoice amount from the
importer, all the Export Monitoring Forms relating to the invoice will be required for the
acquittal of the export transaction.

6.8 Where a person is permanently exporting previously imported equipment, they shall be
required to provide evidence of initial importation of the equipment. Where permission
for permanent export of equipment has been issued by a relevant government agency
prior to the coming into effect of these regulations, the exporter shall provide proof of
that permission to the Bank.

6.9 In cases where goods are exported for the purpose of exhibitions and shows, the exporter
shall be required to complete the Export Monitoring Form I indicating the estimated
value of the goods and make an acquittal upon re-entry into Zambia. Where the goods
have been sold, the acquittal shall be by way of a customs declaration form for the total
sum equivalent to the value of goods sold. Additionally, invoices shall be required as part
of the transaction acquittal.

6.10 Where an export is on credit and in excess of two hundred thousand United States Dollars
(USD200, 000.00), the financial service provider shall be required to ensure that the
exporter has in addition to the Export Monitoring Form I, a letter of credit.
7.0 Import and Remittance Monitoring Form II

7.1 The Import and Remittance Monitoring Form II to be completed by all importers and
remitters, in respect of any proposed imports/remittances of, or exceeding, twenty
thousand United States Dollars (USD20,000) or the equivalent in any foreign currency
shall be made available on the Bank website and the websites of all financial service
providers for ease of access by importers and remitters. The importer/remitter shall be
held accountable for any false declaration of Form II.
7.2 An importer/remitter shall be required to complete four (4) copies of the Import and
Remittance Monitoring Form which shall be distributed as follows:
a) a copy shall remain with the financial service provider;
b) upon receipt of goods at the port of entry, an importer shall take three copies
of Form II that will be verified and endorsed by the Zambia Revenue
Authority. After verification and endorsement, the importer shall retain a copy
and leave two copies with the Zambia Revenue Authority. The Zambia
Revenue Authority will retain one copy and send one to the Bank.
c) Where a remitter sends funds in respect of services or gratuitous transactions
that are not taxable, only two copies of Form II shall be completed (one copy
to the remitter, one to the financial service provider. FSP shall scan and email
a copy of the funds recipients completed Form to the Bank of Zambia using
the email address: monitoringbalanceofpayments@boz.zm
8.0 Export/Import Acquittal Process

8.1 An exporter shall ensure that they acquit transactions with the financial service provider
on receipt of the export proceeds not later than one hundred and twenty days from the
date of export of goods or services. The one hundred and twenty day period shall kick in
upon goods exiting the Republic at the customs port of exit.
8.2 Where an exporter receives prepayments for the exports, the exporter shall be required to
complete the Export Monitoring Form I once the prepayments have been received into
the exporters foreign currency denominated account. The exporter will retain three
copies and leave one form with the financial service provider. On export of the goods, the
remaining forms must accompany the shipment to the port of exit where ZRA will
endorse the forms and retain two copies; the exporter will retain a copy. The transaction
will immediately acquit. In cases where there is partial prepayment, the transaction will
only acquit after receipt of final payment but within 120 days.
8.3 An importer or remitter shall ensure that they acquit the transactions carried out with the
financial service provider within one hundred and twenty days from the date of the
transfer by providing a customs clearance of the imported goods or evidence of provision
of the relevant services.
8.4 Where an importer receives goods before payment is made, the importer shall complete
the Import Monitoring Form II in quadruplicate prior to clearing the goods. The importer
shall then submit the forms to ZRA at the port of entry for verification of imported goods
and endorsement of the Forms. After verification, ZRA shall retain two copies of Form
II, one for Bank of Zambia and the other for ZRA. The importer shall retain two copies to
be submitted to the FSP together with all ZRA clearance documents when remitting
funds. FSP shall endorse the forms and keep one copy while importer shall retain one
copy.
8.5 Where an exporter, importer or remitter fails to acquit any previous transactions, the
financial service provider shall not process any future export/import/remittance
transactions on behalf of that customer until all prior transactions have been fully
acquitted.
9.0 Modes of payments for Imports and Exports

9.1 Receipts and payments for all export and import transactions in value of, or in excess of,
five thousand United States Dollars (US$5,000.00) or the equivalent in any other foreign
currency shall be by Electronic Fund Transfers (EFT).
9.2 Receipts for all exports on credit terms in value of, or in excess of, two hundred thousand
United States Dollars (US$200,000.00) or the equivalent in any other foreign currency
shall be by letters of credit. In this regard, financial service providers shall advise all
intending exporters, importers and remitters of the appropriate mode of payments for the
transactions based on the threshold.
10.0. Returns by Registered Commercial Banks to the Bank

The Statutory Instrument places an obligation on the registered commercial banks to
submit monthly returns to the Bank of all remittances relating to imports out of the
importers account and the export proceeds received into the exporters foreign currency
denominated account.
The returns shall be submitted in the attached format by the 6
th
working day of the month
for the information of the previous month.
11.0 Payments of dividends, royalties and management fees etc.

Registered commercial banks shall continue to process international payments in relation
to dividends, royalties, management fees and any other such payments to foreign based
entities or individuals, provided that such payments are supported by appropriate
documentation as follows:
11.1 Dividends
The payment of dividends abroad must be accompanied by:
a) Board Resolution of the declaration of the dividend;
b) Valid Tax Clearance Certificate issued by ZRA in the name of the business
paying the dividends
c) Certificate and withholding tax certificate in respect of each transaction where
applicable;
d) Withholding tax exemption letter/certificate/dispensation issued under the
Commissioner General;
e) Payment details at a bank outside Zambia in the recipients name; and
f) Audited accounts for the period under which the dividend are declared certified
by an accountant certified by an accountant registered with the Zambia Institute of
Chartered Accountants.
In cases, where an entity wishes to make payments relating to interim dividends, a
board resolution and management accounts will be sufficient to support the
remittance in place of audited accounts. However, for purposes of acquitting the
transaction, the remitter shall be required to submit audited accounts for the
period to which the transaction relates, to the registered commercial bank.
11.2 Royalties and Management Fees.

The payment of royalties or management abroad must be accompanied by:
a) Valid Tax Clearance Certificate and withholding tax certificate in respect of each
transaction;
b) Agreements governing the payment of royalties or management fees.
c) Payment details at a bank outside Zambia in the recipients name
d) Evidence of payment of applicable taxes where applicable;
e) Audited accounts for the period under which the dividend are declared certified
by an accountant certified by an accountant registered with the Zambia Institute of
Chartered Accountants;
f) Withholding tax exemption letter/certificate/dispensation issued under the
Commissioner General;
g) Valid invoice issued by recipient of the royalties or management fees.
12.0. Private External Borrowing/Lending Registration Form III

a) Where a person domiciled in Zambia obtains a loan/other lines of credit from a
non-resident lender or extends a loan/other lines of credit to a non-resident
borrower, the debt shall be registered with the Bank using Form III through a
financial service provider. The borrower/lender shall be held accountable for any
false declaration of Form III.

b) The Bank will assign a Unique Identification Number (UID) to each loan
agreement and for every repayment the financial service provider shall be
required to indicate the UID.

c) A financial service provider domiciled in Zambia which contracts or extends a
loan/other lines of credit from or to a non-resident, shall be required to register the
debt with the Bank;

d) Where a borrower/lender fails to register a debt, the Bank shall not assign a
unique identification number;

e) Financial service providers shall not facilitate remittances for foreign debt
payments unless that debt is registered with the Bank and a unique identification
number has been issued;

f) All foreign debts contracted before the effective date of the regulation are
required to be registered within thirty days from the effective date of the
regulation.;

g) Where a financial service provider obtains a loan from an offshore counterparty or
makes placements with an offshore counterparty, such obligations will have to be
treated in the same manner as private external debt.

h) In instances where a person (including entities) changes a financial service
provider through whom the loan was registered, the relevant documentation
relating to the debt shall be provided to the new financial service provider. The
debt will maintain the same Unique Identification Number for purposes of
continuity in monitoring of the loan at Bank.
13.0 Record of Loan Agreements

For the purpose of debt registration with a financial service provider, a borrower/lender
will be required to submit the following:
a) Evidence of the receipt of the loan amount in a bank account hosted by a financial
service provider and held in the name of the borrower or agreement in case of
lending;

b) In the case of a letter of credit, the borrower provides evidence of the application
of the proceeds of the letter of credit in settlement of payment obligations for the
contracted goods or services;

c) Evidence of the importation and physical delivery into the Republic of the goods
constituting the loan amount or partial payment, or in the case of services, the
delivery of the services; and

d) Where a private external debt/lending was contracted before the coming into
effect of the regulation, the borrower/lender shall provide the information to
facilitate the registration of the debt with the financial service provider.

14.0 Reporting Requirements by Financial Service Providers

Financial service providers shall be required to submit at such frequencies as the Bank
may prescribe, the following reports/returns:

a) All remittances of foreign exchange into and out of the Republic to be submitted
on the attached Money Remittance/Receipt Return;

b) All withdrawals, by debit or credit card, of cash payment for goods and services
in foreign currency every thirty days;

c) Any transfers by a person within any thirty day period from a foreign currency
account in Zambia to a foreign currency account held by that person abroad.

d) Any private borrowing repayments or private lending receipts out of and into
Zambia.

15.0 Applicability of Anti-Money Laundering Measures/Combating of Financing of
Terrorism

Financial service providers are the first in the line of defence in fighting financial crimes
such as money laundering. As such, financial service providers are reminded of their
obligations under the various laws in relation to money laundering. Financial service
providers should not construe these guidelines as an exemption from any of the following
laws; the Prohibition and Prevention of Money Laundering Act (2001), Financial
Intelligence Centre Act (2010) and the Forfeiture of Proceeds of Crime Act (2010).

16.0 Adherence to existing import and export procedures

All exporters and importers are still expected to adhere to all the legal and regulatory
requirements relating to the imports and exports of goods and services.


Issued by the Bank of Zambia
P.O. Box 30080
Lusaka
Zambia
Tel: +260-211-228888
Email: pr@boz.zm or monitoringbalanceofpayments@boz.zm
Website: http://www.boz.zm

Bank of Zambia Balance of Payments Monitoring Guide