Government’s effort to stabilise foreign currency exchange rate is
stifling the generation of forex as it is not taking care of traditional
producers. This has resulted in low export earnings, firms and experts have
Government recently introduced an official market for foreign currency
trade. But, this has failed to ease an acute dollar shortage. Several miners
who spoke to Business Times yesterday said production hiccups
occasioned by foreign currency shortage has rocked the mining sector,
especially gold producers, who are the highest earners of foreign
currency in the country. They surrender a significant portion of their
forex earnings to the central bank as the country struggles for hard
currency. This has dimmed prospects of significant growth.
Facing these challenges, several companies are struggling to restore growth
and are laying off workers while they tackle higher production costs.
Analysts who spoke to Business Times yesterday said the new forex
measures have failed to adequately take into account the supply side
of foreign currency. They said the country’s economic development
programme has been seriously interrupted, because supply of foreign
currency continues to dwindle due to government’s failure to provide
the necessary ingredients to cash cows to produce more. They are now
suffering from serious consequences caused by the government measures.
The oversight by government has hurt the earners of foreign currency.
This has also hurt other industries.
Another handicap to trade is that aggressive pricing of raw materials especially by local suppliers. Companies still cannot absorb the higher production costs stemming from increased prices of raw materials.
Industrialist and the past president of the Confederation of Zimbabwe
Industries, Sifelani Jabangwe told Business Times yesterday there is
need for a fine balance to facilitate stability of foreign currency
exchange rate whilst not chocking producers’ growth.
“Some producers need more than what they surrender. But, the private
sector need to step up and come forward with proposals because in the
absence of guidance, government will do what they think will work,”
Economist James Wadi agreed with Jabangwe saying efforts to stabilise
the exchange rate stifle supply of hard currency. “The worrying signs are that traditional producers, who earn foreign currency, are not taken care of. They are choking because government is not providing the necessary ingredients to produce. This is worrying. That’s the impact of the measures introduced by government,” he said.
“There is need to urgently address issues hampering producers of
foreign currencies. That is the biggest issue. Let’s make basic things
work. There is a credibility issue policy wise here. The hiccups
worsen the situation.”
Another economist, John Robertson said exporters are failing to meet
requirements to import raw material required to produce for exports.
“That’s a huge challenge. This means companies are downsizing and
people losing losses in the process,” he said.
Zimbabwe firms are failing to access from the interbank market where
rates are higher than the parallel market.
Investment analyst, Itai Chirume said the interbank market remained ‘elitised’. “As long as the interbank market remains elitised, the parallel market remains as it is the only viable market.”
Economist Eddie Cross concurred with Chirume saying: “It (interbank
market) does not exist. All the banks with their money look after
their clients. Let’s get the monetary committee now and supervise the