BERNARD MPOFU
Zimbabwe’s currency debate this week intensified after the Confederation of Zimbabwe Industries (CZI) announced its plans to approach other business organisations to push for the private sector’s position on the country’s anchor currency as most firms lurch into a financial crisis, it has been established.
Since adopting the multicurrency regime in 2009, the country’s manufacturing sector, one of the most diversified in the region, has been struggling to access concessionary funding to retool and access throughput materials offshore.
Estimates from the country’s industrial lobby group show that foreign currency backlog for companies now hovers around $600 million.
Despite announcing a Monetary Policy Statement which seeks to stabilise the macroeconomic situation, industry said the interventions were not enough to grow business in the short to medium term.
CZI pressed the panic button over the worsening currency situation after the exchange on the parallel market breached the 100 percent mark against bond notes which were at par with the greenback when they were introduced two years ago.
This prompted the industrialists to outline a two-week timeline to finalise the currency position.
CZI president Sifelani Jabangwe told this paper that the organisation’s technical committee would meet on Friday to finalise its position on which currency to use.
Zimbabwe adopted a basket of international currencies mainly dominated by the United States dollar as a desperate move to tame runaway inflation which had officially peaked 231 million percent in 2008.
“There are several options on the table at the moment but as CZI, we are saying we should engage other business organisations so that we come up with one position which will then submit to government for consideration,” Jabangwe said in a telephone interview.
“In the coming two weeks we should have a common position with the Zimbabwe National Chamber of Commerce, Bankers Association of Zimbabwe, Chamber of Mines of Zimbabwe and farming organisations on how best we should address the currency situation.
” A perennial trade imbalance, emerging inflation pressures and lack of financial prudence has worsened the foreign currency situation in the country as the greenback becomes more elusive.
In a paper titled “Post-Election Recovery Document: Macro and Currency” which was crafted before the July 30 elections, the CZI said government should consider joining the Rand Monetary Union; convert all RTGS dollars into new local currency, which is pegged at 1:1 with the US dollar, and thereafter float it and ring fence RTGS dollars and undertake to repay them as US dollars in the course of time to ease the cash crunch and find a solution to the country’s currency situation.
On Monday, central bank chief John Mangudya re-introduced foreign currency accounts nearly five years after suspending them in an effort to boost confidence in the banking system. The apex bank also announced that it was finalising discussions with the African ExportImport Bank towards a $500 million Nostro stabilisation Guarantee Facility to provide Nostro FCA holders with assurance that foreign currency shall be available when required by the account holders.
“This policy measure is expected to encourage exports, diaspora remittances, banking of foreign currency into Nostro FCAs and to eliminate the commingling or dilution effect of RTGS balances on Nostro foreign currency accounts,” Mangudya said.
Despite announcing these measures, parallel market rates remained firm as experts call for a stimulus package and a raft of economic and political reform to attract funds from global markets
