THE Reserve Bank of Zimbabwe (RBZ) says foreign currency generation from other sources apart from exports has dwindled which can be blamed on declining confidence in the economy.
BY TATIRA ZWINOIRA
Speaking at the sixth edition of the ZimTrade Annual Exporters’ Conference in Harare last week, RBZ deputy director in charge of exchange control Farai Masendu said exports were the major contributor to foreign currency earnings.
“Our foreign exchange is largely emanating from exports, the exports of the various products from the various sectors of the economy. You talk of your mining, agriculture, manufacturing, tourism, and all the other sectors of the economy and that is about 61% or 60%. This trend has been obtained from the time we adopted the multi-currency,” he said.
“The other sources of foreign exchange have not performed very well and I am sure that there are initiatives at the various platforms to ensure that we prop up the other sources of foreign exchange so that they complement what we are currently generating from. But, exports have been the anchor in terms of our foreign currency receipts in terms of the economy.”
Exports are the main source of foreign exchange followed by Diaspora remittances, loan proceeds, income receipts and foreign investments.
A look at the foreign currency generation of three out four of these foreign currency generators during the January to June period confirms that there has been a drop.
While about $2,96 billion in foreign currency was generated in the period under review, diaspora remittances declined during the period by 8,37%, income receipts (26,9%) and foreign investment (79,27%) from the 2016 comparative.
ZimTrade chairman Lance Jena said his organisation and RBZ were taking steps to address this challenge by bringing lines of credit to manufacturers to export which could see the foreign currency earnings increasing.
“…and it is my hope that the presence of the governor [RBZ governor John Mangudya] this morning is testimony that the central bank is joining ZimTrade to interrogate the issue of affordable finance. To the point where if I may say facilities being offered to the central bank to our exporters will allow you to borrow at a small 7,5%,” he said.
In the eight months ending August, Zimbabwe’s imports amounted to $3,6 billion, while exports trailed at $2,2 billion. In the 2016 comparative, imports were $3,3 billion against exports of $1,5 billion.