Manufacturers struggle to access forex: CZI

LIVINGSTONE MARUFU

The Confederation of Zimbabwe Industry (CZI), the country’s biggest business lobby  group, has said manufacturers  are  finding it difficult to obtain foreign currency from the Willing Buyer Willing Seller (WBWS) platform in order to import critical  raw  materials.

CZI  CEO, Sekai Kuvarika  said  the situation was dire.

“This is a serious issue. The manufacturers  are failing to access forex  for their businesses and we are still engaging the monetary authorities over the issue. We believe that we have a bit of stability  in the market  but we have some serious  issues on  failing to access forex.

“The challenge is that companies are not accessing the forex they require for the importation of raw materials. As you know the manufacturing sector in Zimbabwe is highly import dependent, over 70% in most of the cases,” Kuvarika said.

She said CZI has engaged the Reserve Bank of Zimbabwe governor, Dr John Mushayavanhu over the matter.

“We have met the governor to discuss the piling ZiG due to limited access to foreign currency to bring raw materials. From our conversations, the RBZ seems to be taking the law of averages  into play where  he argued that manufacturers may have   significant US$  local sales therefore their forex requirement may not be very high,” she said.

According to Rufaro Zengeni, an economic analyst, WBWS  need to be liberalized in order to be a useful platform for forex trading.

“We have these contradictions where people are not allowed to bid higher if the RBZ has fixed the exchange rate; there would not be this shortage. There is a shortage of forex and the prices have not moved in the past  three months, something is wrong with those propositions as they don’t reconcile.

We still have a price discovery mechanism problem in the economy,” he said.

Economists are equally concerned.

According to Dr Prosper Chitambara, an economist, the scarcity of forex on the official market fuels ZiG devaluation and inflation.

“It seems that there are not willing sellers of foreign exchange to meet the high number of willing buyers. This means a lot of businesses are having to seek recourse to the parallel market to get foreign exchange and this explains the depreciation of the ZiG  due to the strong demand for the US$ which is not matched by the supply on the official market. This is basically the mismatch between the forex and  available supply on the formal market,” Dr Chitambara said.

Another economist, Professor Gift Mugano said the industry is on the brink amid serious forex shortages.

“Business executives told me that they are failing to access forex from banks with some securing  only 5-10% of their forex requirement notwithstanding the assurances given by the RBZ.

Due to the high demand of US$, exchange rates have started running away  to the range of between ZiG22.30/US$1  and  ZiG24/US$1,” Prof Mugano said.