PLANS to increase value added exports by 5% are under threat from delays in foreign payments amid revelations that banks “weigh the usage” of company funds when they are processing payments.
BY TATIRA ZWINOIRA
This comes as the Reserve Bank of Zimbabwe recently revealed it only redistributes between 25 and 30% of foreign exchange in the economy, while the bulk remained with banks.
Speaking at the Ease of Doing Business Using the Rapid Results Approach for the Export Sector workshop yesterday in Harare, the export capacity thematic working group team leader, Salie Khan said discussions with the central bank governor, John Mangudya revealed that banks could be contributing to the foreign currency challenges.
“In discussions, which we had with the RBZ governor, he told us that banks were weighing options as to what would be the best way to make money. So they may not issue out funds for exporters and manufacturers depending on their options,” he said.
In a heated debate at the workshop, some exporters in the manufacturing sector highlighted that banks were refusing to make foreign payments, even if their money in the bank account came from outside the country.
Eagle Italian Shoes director, Li Song told NewsDay her company had been struggling to remit payments from their bank since mid-last year to date.
She said they had received payment for their products from Angola worth $1,8 million, which they deposited in the bank last year, but have been unable to use those funds to buy raw materials.
“I have not been able to send out a $5 000 payment to our suppliers since mid-last year,” Song said.
Song also serves as the chairperson of the Leather and Shoe Association.
Mangudya is on record saying companies or individuals that bring in foreign currency from outside the country have a right to use that money.
Under the central bank’s priority list, raw materials are listed under priority one.
Industry and Commerce permanent secretary, Abigail Shoniwa said her ministry was aware of the plight of manufacturers, who were unable to send out payments to their suppliers.
“What we do as ministry for companies who approach us is that we write letters offering our support for the company that can be taken to their bank to help them access their funds. We need more companies to approach us with their issues in order to facilitate that they use their funds,” she said.
The implementation of export initiatives, which includes the 5% increment on value added exports under the Ease of Doing Business Rapid Results was undertaken six weeks ago with a target of 75 days to complete. So far, the Rapid Results export initiative plan is halfway to the deadline.
In recent months, manufacturers, through the Confederation of Zimbabwe Industries, have complained that delays in foreign currency allocations were hampering manufacturers with some on the brink.
ZimTrade CEO, Sithembile Pilime said the problem facing companies was compounded by the fact that Zimbabwe had a low credit rating internationally, thereby, making it hard for firms to get supplies on credit.
“Before, you could purchase supplies on credit, but now the country has a low credit rating making it difficult to get funds for raw materials. As it stands, most suppliers want cash upfront before making any transactions,” she said.
As a result, to help boost manufacturers, ZimTrade is working with the Office of the President and Cabinet to help tackle these challenges, she said.