Forex auction system woes mount

TINASHE MAKICHI Local firms are struggling to access foreign currency allotted to them at the Reserve Bank of Zimbabwe (RBZ) foreign currency auction system, amid revelations it is taking at least two months, Business Times can report. The RBZ introduced the auction system last year as part of efforts to deal with unrelenting parallel market foreign currency exchange rate, which continued to skyrocket. The central bank had hoped the system would deal with the acute shortage of foreign currency in the country. But, captains of industry have saidthat companies were still failing to access adequate foreign currency from the system, forcing them to source forex from the parallel market where premiums are punitive. Governor of Reserve Bank of Zimbabwe (RBZ) John Mangudya presents his 2016 Monetary Policy Statement after declaring the country lost USD1.8 billion through illicit money transfers, in Harare, on February 4, 2016. (Photo by Jekesai NJIKIZANA / AFP) (Photo by JEKESAI NJIKIZANA/AFP via Getty Images) In the event that their bids were accepted, it is taking more than two months to access the funds, captains of industry said. “We have received such reports where some disbursements are said to have taken up to eight weeks after allocations,” the Zimbabwe National Chamber of Commerce CEO Christopher Mugaga said this week. “This has, however, posed a huge challenge on the issue of pricing. The challenge has been that demand for foreign currency is outstripping supply.” Several industrialists who spoke to Business Times this week, who preferred anonymity, said the situation was dire for companies. The Confederation of Zimbabwe president Henry Ruzvidzo told Business Times: “(Although) there have been some improvements, there (were) issues around the (auction) system.” He could not be drawn into unpacking the issues. As part of efforts to address the challenges, the government recently committed to earmark a minimum of 15% of its total foreign currency collections to support the viability of the auction system, which has proved successful since its launch. The RBZ admitted it was working flat out to smoothen the process. Recently, the RBZ said several companies have been abusing forex accessed from the auction system. The central bank implicated 18 companies as the apex bank said it was instilling discipline in the market. The enactment of Statutory Instrument 127 of 2021 empowered the RBZ to deal with those that have been abusing the auction system. Government has in the past accused errant companies of accessing foreign currency at the auction market at a rate of ZWL$85 but pricing their goods and services at a rate of ZWL$120. Companies facing possible penalties include National Foods Limited, Georgia Petroleum, Tettola Investments, Africa Steel, Westville Investments, Flicknick Enterprises, Duo Valley Commodity Brokers, Faircclot Investments, GlenuLas Trading, Natural Stone Export Company, Nuvert Trading, Phirebrook

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Forex auction system woes mount

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