Business demand upward review of forex retention

LIVINGSTONE MARUFU

Business leaders have said that 75% foreign exchange retention is insufficient to meet their operational needs,  Business Times can report.

Exporters are compelled to surrender 25% of their export earnings, with the portion liquidated into local currency  at the official rate.

The Chamber of Mines of Zimbabwe (CoMZ) claimed in its  submissions  to Dr. John Mushayavanhu, the governor of the Reserve Bank of Zimbabwe, that the  forex retention threshold policy has affected the mining sector so severely that some companies have lowered their mining capacity and are finding it  difficult to survive.

“Most mining companies are facing foreign exchange shortfalls to meet their operational requirements and funding of expansion projects. The available foreign currency has been coming down largely due to falling mineral earnings (on the back of softening commodity prices), with the mandatory 75% now being applied on a shrinking foreign exchange base,”  the Chamber of Mines said.

The Zimbabwe National Chamber of Commerce  (ZNCC) said the current forex retention threshold  was affecting companies viability.

“We are engaging the central bank to  increase the forex retention threshold  further from the current 75% in order for our members to meet their forex requirements. With the current system, companies are facing serious forex shortages. With most firms grappling to access forex on the willing buyer willing seller platform, the 75% forex retention threshold is affecting the companies,” ZNCC said.