New forex rules threaten to choke exporters

LIVINGSTONE MARUFU AND SAMANTHA MADE

Zimbabwe’s exporters, already grappling with a tough economic environment, are now facing fresh turmoil following the government’s latest move to tighten its grip on foreign currency earnings—scrapping key export incentives and enforcing harsher surrender requirements. Business leaders and economists warn that the decision, risks derailing production, draining vital forex inflows, and stalling Zimbabwe’s fragile economic recovery.

The removal of the export incentive and the enforcement of a steep 70% surrender of foreign currency earnings within 90 days sent shockwaves across critical sectors such as mining, agriculture, and manufacturing.

Exporters say the measures are punitive and could force some operations to the brink.

“Last Friday, the exporters conference convened under the familiar shadow of frustration, one that has come to define Zimbabwe’s struggling export economy,” Oswell Binha, the chairman of the CEO Africa Roundtable,told Business Times, a market leader in business, financial and economic reportage.

 “What was meant to be a celebration of the country’s outward-looking economic aspirations quickly turned into a forum of grievances, as exporters voiced concerns over policy misalignments that continue to throttle their competitiveness.”

At the heart of the discontent is the 30% foreign currency surrender requirement—deemed by many exporters as a disguised tax. The policy compels businesses to liquidate nearly a third of their export earnings at the official exchange rate, which typically trails parallel market rates.

“The policy effectively penalises exporters for doing the very thing the government claims to encourage—exporting,” Binha said.

“Exporters source their inputs in US dollars, service external obligations in US dollars, procure fuel and pay logistics in US dollars. Yet, they are compelled to surrender 30% of their earnings for a perennially volatile currency that cannot retain value or meet operational requirements.”

He added: “But the forex policy is only the tip of the iceberg. Exporters argue that Zimbabwe’s export environment is plagued by longstanding structural inefficiencies—ranging from erratic policy shifts to exorbitant production costs, and regulatory fragmentation.

“These systemic issues have been compounded by a macroeconomic environment marred by volatility and diminished investor confidence,” Binha added.

The Zimbabwe National Chamber of Commerce (ZNCC) president Tapiwa Karoro described a challenging operational terrain. He said exporters in Zimbabwe are navigating a complex environment marked by both structural and policy-related challenges.

He pointed to the dominance of US dollar-denominated operating costs across the economy.

Exporters pay for inputs, logistics, electricity, and skilled labour in hard currency. At the same time, access to affordable finance remains elusive. Most exporters, particularly SMEs, struggle to access long-term credit. ZiG interest rates are high, and banks remain risk-averse. There is also considerable uncertainty around the exchange rate. Many exporters claim the Willing Buyer Willing Seller (WBWS) system is opaque, with some being denied access due to currency shortages.

Karoro added that policy unpredictability was perhaps the greatest challenge of all. Sudden changes—like the new surrender rules—complicate planning and weaken confidence.

“The current 30% surrender requirement erodes value,” he said. “It’s not just a forex issue. It creates working capital constraints. Exporters lose critical funds needed for procurement, reinvestment, and debt servicing.”

Economist Eddie Cross did not mince words: “At present, exporters do not receive any incentives at all. In fact, there are considerable disincentives.”

He explained that high power and transport costs already drain export proceeds. These, he noted, are charges levied on the exporter at source. When added to royalty payments—some of which are above international norms—the net effect is a direct disincentive to export activity.

Not everyone agrees with the exporters’ complaints.

Misheck Ugaro, Vice President of the Zimbabwe Economics Society and an investment banker, offered a blunt counterpoint.

“ZIG is stable, and there’s no more need for any incentive,” he said. “Exporters just need to be efficient and cost-effective. The authorities’ only obligation is a stable local currency. It’s not government’s role to incentivize efficiency.”

He added: “Our industry is full of crybabies. They better wake up or go into extinction.”

Economist Dr. Prosper Chitambara took a more balanced view.

“Exporters would prefer to retain all their forex. The 30% surrender requirement is effectively an indirect tax,” he said. “It erodes competitiveness and weakens the incentive to export.”

He acknowledged improvements in the black market premium but stressed that during periods of wider spreads, the policy’s costs become even higher. Chitambara also highlighted other structural challenges—power outages, a burdensome tax regime, and policy volatility—all of which weigh down exporters just like they do other formal businesses.

Economic analyst Victor Bhoroma warned that the forex measures could devastate already struggling firms. He said the cost of production in Zimbabwe is already high due to reliance on alternative power, high inland haulage costs, and exchange-related losses.

“The new surrender requirements only worsen this. Exporters now find it increasingly unviable to defend markets or service offshore obligations,” Bhoroma said. “Zimbabwean exporters are already at a disadvantage when compared to regional competitors like Zambia and South Africa. This policy makes it worse.”

But the central bank appears unmoved. Dennis Chirata, Deputy Director of the RBZ’s Export Division, made it clear the apex bank is prioritising macroeconomic stability over industry demands.

“We are pursuing a tight monetary stance. That means discontinuing quasi-fiscal activities like incentives,” Chirata said. “Paying exporters incentives would compromise our monetary strategy. We’re focused on controlling the money supply to end the economic crisis.

Despite the headwinds, ZimTrade board member and ZNCC vice president Josephine Takundwa struck a more hopeful tone.

“Exports are the country’s major foreign currency earners. While challenges like input costs, labour market inefficiencies, and climate unpredictability persist—particularly in agriculture—ZimTrade efforts have boosted exports,” Takundwa said.

“From 2023 to 2024, exports increased. And 2025 looks promising. Yes, challenges remain, but what’s key is to keep working towards strengthening the export industry.”

As Zimbabwe’s government doubles down on its currency stability strategy, exporters say the real price is being paid by productive sectors that bring in the foreign exchange the country so desperately needs. The call is not for handouts, they argue, but for fair treatment, predictability, and a policy environment that rewards production—not punishes it.

Until then, Zimbabwe risks turning its exporters into economic hostages—squeezed between high costs and shrinking incentives in a race they are increasingly losing.