Forex backlog ghost haunts industry

LIVINGSTONE MARUFU

Captains of industry fear that some companies risk operating with very thin working capital amid revelations that the central bank is yet to clear the foreign currency backlog accumulated at the beginning of the year.

The Reserve Bank of Zimbabwe has made a concerted effort to clear the bulk of the foreign currency backlog with some companies receiving at T+2 period.

But the industry is not happy with the January to March backlog which is yet to be cleared.

The Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza told Business Times that the clearance of that old backlog will go a long way in assisting companies with working capital.

“We appreciate that the RBZ is doing a great job in providing the forex from the auction as quickly as possible but what we are appealing to the monetary authorities now is for them to pay allotment 88 to 93 which still hurts the businesses.

“This has created a huge gap in various companies’ balance sheets as they need that money to ramp up production during this peak period,” Matsheza said.

In July, the industry promised the Financial Intelligence Unit that it will sell in local currency if the companies can access foreign currency easily and the current forex backlog is cleared.

It has emerged that some companies continue to exclusively charge in US$ as that backlog which authorities are supposed to clear remain outstanding.

Some companies with US$ loans said they need to pay loans in the same currency of borrowing in terms of Statutory 118 of 2022 and hence continue to sell in US$.

The Zimbabwe National Chamber of Commerce president Mike Kamungeremu said many businesses continue to suffer as a result of the backlog.

“We are still waiting for the authorities to clear the backlog as they have not done so. Instead, they continue to pay the new allotments leaving out old ones,” he said.

An executive from a Harare-based company told this publication that he still hopes that the backlog will be cleared before the year ends and this will help to ramp up production.

“With the current liquidity squeeze in the market, we have very limited working capital and if the February backlog is not cleared in time this means we will downscale in the next three weeks resulting in shortages of some commodities in the market,” an executive who preferred anonymity said.

At a post Cabinet briefing on Tuesday, Information, Publicity and Broadcasting Services minister Monica Mutsvangwa said the foreign currency available will continue to be auctioned, and all winning bids should be settled within two days from the date of the auction (T+2) in line with internationally accepted practices.

“Government will continue to institute and strengthen measures aimed at bringing confidence and stability in the economy and eliminating arbitrage opportunities through manipulation of the exchange rate,” Mutsvangwa said.

She said the government would continue to institute and strengthen measures aimed at bringing confidence and stability in the economy and eliminating arbitrage opportunities through manipulation of the exchange rate.