Mangudya reprimands forex greedy manufacturers

THE Reserve Bank of Zimbabwe governor, John Mangudya says foreign currency demand from manufacturers is too much, considering their low exports.

BY TATIRA ZWINOIRA

His call comes after imported raw materials rose to 36% from 16% last year.

Addressing guests at the launch of the Confederation of Zimbabwe Industries (CZI) Manufacturing Sector Survey 2017 yesterday in Harare, Mangudya said the appetite for foreign currency was unwarranted considering manufacturers do not generate foreign currency.

“The utilisation of foreign currency is too much. You have seen yourself last year when there was a drought, we were utilising 84% (raw materials) from the local market, now there is no drought in 2017, they are utilising 64% but output has gone up. If they (manufacturers) are using foreign currency, they are using imports to produce,” he said.

Mangudya said he was “concerned by the statistic”.

“We need to increase production, but the problem with manufacturing sector is that the production is increased by using foreign currency. I have never seen a sector that utilises foreign currency like you (manufacturing), I think that is in Zimbabwe. This sector called the manufacturing sector, they only export 13% if you include other minerals, which are manufactured but if you take pure manufacturing products in this country, they are between 5 and 10% for exports,” he said.

The survey covered the period January to September 14.

“… so, it means that this year, the companies in industry are now using more foreign currency than before,” he said

According to statistics from RBZ, 100% of exports from the manufacturing sector are retained by the sector, raising concerns over the rise in forex demand.

The high demand stems from manufacturers wanting to pay foreign suppliers as credit terms were no longer being offered. Despite this, manufacturers were still being frustrated by the banks.

The survey reported that the foreign currency backlog was $651 million.

According to the survey, 22% of the companies have to wait more than three months for foreign currency, with 23% waiting one to two months and another 23% less than two weeks.

Companies said they were now sourcing 25% of their foreign currency from the parallel market, leading them to raise their prices to accommodate the 20% to 50% premium spent to purchasing the cash.

Mangudya warned companies to stop using these premiums to determine their pricing, as some companies got 75 to 100% foreign currency allocations from RBZ and banks.

“You need to change to ensure that prices in Zimbabwe are reasonably priced. Some people, companies and firms get 75% to 100% foreign currency from the RBZ, but they still choose the marginal opportunity cost pricing system, I think that should desist this is why you cannot be competitive,” he said.

About 97% of the companies that participated in the survey said they were negatively affected by cash shortages and foreign currency challenges.

Do you have a coronavirus story? You can email us on: news@alphamedia.co.zw

22 Comments

  1. What the “manufacturers” are doing is simple Dr Mangudya. They are doing very little or in some cases no manufacturing at all. They are importing and re-packaging. Really clever ones tell you they are importing “crude” stuff and processing it.

    So, Dr Mangudya, why don’t you take a walk to the so called manufaturing plants to see what they are really doing there. Sift through their records and ransack their warehouses. They are conning the nation.

    1. Who drained our Nostro account in the first place and where were you Doctor Mangudya?

    2. Very true Dzingi,and they don’t want to use the forex allocated to them to finance the production of primary raw materials like Soyabean but would rather use it to import luxuries. This is the sought of mischief and deceit that even the Gideon Gono era faced. What we need Dr Mangudya is to allocate forex to any deserving sector conditionally, not this current scenario of blackmail by industry.

      1. And yet these greedy bastards will hike prices willy nilly without any measure taken against them while we suffer

  2. Hey Mangudya, give me at least 10 products manufactured today in Zimbabwe. The so called manufacturers are just official distributors.

    1. Electric cables, Fertilizers, Alcohol, Dairy Products, Tyres, Soap, Cooking Oil, Drinks, Stockfeeds, Leather shoes

  3. Comment…True brothers, why is Mangudya failing to go around making followups on those companies they have given forex, their addresses are there if they fail to comply cancel their trading licences. Also why do you not give the public your compliant department number so that people can call and report misdemeanor. We can even report those service stations who keep asking to be paid in cash yet you pay for their fuel. Have a feel of what is on the ground, the problem in Zimbabwe is that we have very few business people most of them are MAKORONYERA, dirty dealers.

    1. Dr Gono did it in the initial stage of his reign and became enemy number one in the so-called corporate world then.

    2. Mushayabasa Tengesai

      Mangudya should resign rather than go around checking anything. The advent of the economic troubles we are facing came with his entry at the reserve bank and his desire to see his signature on some sort of money which led to his ill-fated bond notes. This guy pledged to resign if bond notes failed. He should do so.

  4. Some people seem totally ignorant about manufacturing in Zimbabwe and have high appetite for imports. Manufacturing is there and growing, hence the high demand for imported raw materials. Our agriculture, the main source of raw materials has not performed apart from tobacco until this year where only abundant maize was produced. Employment has gone up in the manufacturing, you people need to take the same advise you are giving Mangudya to go and see the production processes. Whinning and complaining while other are doing something to try and revive industry is all you do. Keep up the good work to those manufacturers standing up and helping the country to save forex. Imagine if all those products being manufactured where being imported, the demand for forex will even be higher and there will be shortages of the goods.

    1. That’s not true. The demanded forex per unit of output is way greater that the unit cost of importation for most products claimed to be manufactured locally. The labour force survey results shows that employment in the so called manufacturing sector is actually on the decline.

  5. Some people are totally ignorant about how things are in Zimbabwe. manufacturing is growing and beginning to employ more people. The demand for more forex is because as more manufacturers are coming in, the demand for raw materials has increased, and these raw materials have to be imported because they are not available in Zimbabwe. That is a good sign. what is needed now is to produce more raw materials. You guys need to take the same advise you are giving Mangudya and go and see whats happening in manufacturing. The challenge is manufacturers are not able to export what they are producing locally. that is what need to be addressed.

  6. Facing Mt Zimbabwe

    Three-tier pricing is going on unchecked, petrol stations refusing swiping and demanding unavailable cash, commodity and pharmaceutical price increases daily – does RBZ not have an inspectorate unit to check these malpractices on the ground. Unstoppably back to the horrors of 2007-08 TICHIONA.

  7. Increase in manufacturers imports should lead to decrease in finished goods imports, there should be a way to monitor this. It should be a good thing.

  8. Have you taken into account the fact that other companies that would have imported components/ supplies for industry are now finding it difficult if not impossible to do so and are charging premiums. Therefore manufacturers are choosing to import those components directly themselves or are forced to raise prices to take into account the premiums charged by others!

  9. Why were all these problems not there during GNU era, why cant Mangudya see the real cause of the problem rather than wasting time & effort fighting symptoms

  10. It is better when the manufacturers bring little of the forex, than some political parties who are importing luxury cars with no prospects of exporting anything at all.

  11. Mangudya’s thinking is defective, the reality on the ground is very different. Statistics need intelligent interpretation.

    1. Correct. The guy seems to have no clue of what he is talking about. In his role as the Governor of the APEX bank he needs CRITICAL ANALYSIS SKILLS as part of his must have competences so that he can be able to sift through loads of information and make optimum decisions and informed pronouncements. If the import bill for manufacturers is growing the it means the manufacturing sector is also growing, however there is no core-relation with exports as these products are for domestic consumption. These are products which are replacing those which have been literally banned by SI64 OF 2016. The drop in imports of finished goods has been substituted by an increase in imports of raw materials to support the local industry. If you look at the manufacturing sector, industry by industry you will find that their raw materials are not readily available locally:
      Examples – Delta imports the concentrates for their carbonated soft drinks, oil producers are importing crude oil (why don’t we have command agriculture focusing on soya beans production?), BAIC and Quest import vehicle kits and components, CAPRI imports kits and components, the least is endless.

  12. Mangundya just resign as you promised to

  13. Realist you are a failure.

  14. That’s no way to run the economy. Too much of everything in this country is highly controlled and centralized and it creates unnecessary bottlenecks. RBZ has too much control and to make matters worse they seem deluded about real things on the ground.

Leave a Reply

Your email address will not be published. Required fields are marked *