The Confederation of Zimbabwe Industries (CZI) says foreign payment delays have “adversely” affected local producers amid fears that some companies would close down due to losses in revenue.
BY TATIRA ZWINOIRA
The effect of delays on foreign payments has led companies to struggle to meet production deadlines slowing production and in turn affecting revenue streams, the body said yesterday.
Briefing journalists on the upcoming 2017 Economic Outlook Symposium to be held in Harare on January 26, CZI president Busisa Moyo said the situation was very dire with local producers potentially facing closures over the delays.
“All manufacturers have been adversely affected from the delays in foreign payments, from the light to heavy manufacturers. The situation is quite unsustainable and if it continues, we will see a lot of companies facing closures. We are in talks with the Reserve Bank of Zimbabwe and hope the situation can be rectified,” he said.
“Not only is there a loss of revenue but companies could close.”
To combat the delays, local producers have urged retailers and those with a retail branch to offer discounts to customers who buy using cash.
The idea behind the incentive is to repatriate funds a bit faster to their suppliers to meet production deadlines.
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The delays have to do with the Reserve Bank of Zimbabwe (RBZ) and banks running low of foreign currency.
As such, the RBZ has been playing a balancing act in trying to allocate payments with the little foreign currency it has.
Since mid-last year, liquidity shortages have grown on a monthly basis on the back of increased demand for the United States dollar.
Analysts have warned the country was going to “shoot itself in the foot” by using US dollars instead of the rand, which has made Zimbabwe an uncompetitive source market, thereby, leading to low exports.
A CZI survey of the state of manufacturing found 68% of the country’s suppliers come from South Africa, China, Zambia, Australia, India, Mozambique, Mexico and Germany in that order.
The delays in making foreign payments have seen companies resorting to the black market to raise cash for imports. These transactions are done at a cost and companies pass on that component to the final consumer.
Since the third quarter of 2016, liquidity constraints have been deepening, as the country has become increasingly uncompetitive as a source market in the region.
This has led to increased calls for the adoption of the rand.
But the calls have not been heeded, with RBZ saying the multicurrency regime, which uses a basket of nine currencies including the dollar, is the best alternative for now.
Foreign payments delays, the adoption of the South African rand and a look at tourism as an export generator will the main topics to be discussed at the upcoming symposium.
