THE Confederation of Zimbabwe Industries (CZI) is lobbying the government to allow businesses that are earning foreign currency to trade with those that require it in a bid to reduce the cost of forex in the parallel market.
BY MTHANDAZO NYONI
Addressing delegates at the Zimbabwe International Trade Fair International Business Conference held recently in Bulawayo, CZI president, Sifelani Jabangwe said premiums charged on foreign currency were not sustainable.
“The last quarter of 2017 was most painful for businesses and a lot of businesses were actually considering closing down. Fortunately, that did not happen. The Reserve Bank of Zimbabwe managed to allocate some currency and other businesses had to go to the open market, which we believe needs to be avoided,” he said.
Jabangwe said the issue of foreign currency for importing raw material was problematic and driving businesses to the edge.
“One of the issues that we have been lobbying on throughout the year, as CZI, had to do with the fiscus deficit, which we felt had been driven, as indicated, by money supply and now ended up with that disparity between real-time gross settlement systems (RTGS) and the actual cash and also that was driving the black market,” he said.
“What we observed was that, when the market became a bit more confident, the rate itself, which had gone to about 100% collapsed to about 50% and thereafter between December and around now it has more or less been stable.”
Jabangwe said the country has got adequate foreign currency generation capacity, but the allocation system was inefficient.
“The concern now, is that we believe that the country has got adequate foreign currency generation capacity, but the allocation system is not efficient. So we believe that if there was an opportunity to allow those that are earning currency to trade with those that require it, the rate would not actually be where it is, it will soften,” he said.
“It will not run away, as long as government itself does not print new RTGS. So, basically, the situation is within our control.”
Zimbabwe is facing serious foreign currency shortages, forcing businesses to source it from the black market at a premium of more than 40%.