LIVINGSTONE MARUFU
The sharp depreciation of the Zimbabwe dollar against major currencies, especially the United States dollar, is hurting the ailing local industry, Zimbabwe’s largest business group, the Confederation of Zimbabwe (CZI) has said.
The Zimbabwe dollar continues to lose value. On the black market, the Zimbabwe dollar was this week trading at ZWL$250 against the dollar. In December, the Zimbabwe dollar was trading at ZWL$200 against the United States dollar.
At the foreign currency auction system, the local dollar was this week trading at ZWL$120.5174 against the greenback from ZWL$108 in December 2021.
The CZI president, Kurai Matsheza said the volatile exchange rate was the ‘elephant in the room’.
“We can all agree that our economy has some protracted challenges that have stayed with us for far too long but the currency question [exchange rate] is the elephant in the room as it has a direct impact on our immediate working capital which has a direct impact on production,” Matsheza said.
“If not rectified urgently, this may affect the projected economic growth. Volatile exchange rates also have an impact on competitiveness, planning and ease of doing business.”
Matsheza said other headwinds troubling the industry included an overregulated business environment, cost of doing business, volatile exchange rate and crippling power cuts.
The development comes as captains of industry are meeting today in the capital Harare to discuss the challenges adversely affecting industry with the Minister of Finance and Economic Development, Mthuli Ncube and the governor of the Reserve Bank of Zimbabwe, John Mangudya.
Matsheza said the headwinds have pushed the cost of production and prices of goods high. They are also a threat to economic growth projections.
The government has projected a 5.5% economic growth this year.
But, Matsheza said unless the headwinds are addressed, it would be difficult to achieve the target.
“The industry challenges have remained the same over the past few months. As business we are congregating on Thursday to discuss the projected impact of fiscal and monetary policy on business and economic prospects for 2022,” Matsheza said.
“The auction system’s refinement and stability remains a pipedream. We will also discuss the manufacturing, agricultural sector, mining sector, investment outlook and policy makers’ perspective for 2022.”
He said the central bank was battling to settle auction system bids within the promised two weeks.
“The monetary authorities promised to settle bids within two weeks but the process is taking close to three weeks or more. We want the monetary authorities to settle bids within a week so as to enhance our working capital,” Matsheza said.
