The Reserve Bank of Zimbabwe (RBZ) will intensify the monitoring of all outstanding acquittals as it moves to stem the abuse of foreign currency accessed from the auction system.
The move comes on the back of the gazetting of Statutory Instrument (SI) 127 of 2021 last month which gives RBZ more teeth to bite forex abusers.
Businesses which will not comply with key exchange control regulations on imports, especially the Bills of Entry (BOE) to clear imports and abuse of foreign currency accessed from the auction system will face severe consequences, the bank has warned.
According to the RBZ Exchange Control General Order, goods and services paid for in advance must be received within three months. Advance foreign payments shall be acquitted using BOE as confirmation of receipt of the goods in the country.
As a control measure, the authorised dealers, banks in this case, and the RBZ would make follow-ups on outstanding acquittals of advance foreign payments.
RBZ governor, John Mangudya told Business Times that the move by the central bank was to ensure effective administration of forex as some companies that access foreign currency from the auction system were not using it for the intended purposes.
Those with unacquitted foreign payments (Bill of Entry Imports) will not be allowed to participate in the auction.
“We now need to ensure that there is compliance on import Bills of Entry and ensure that the companies have used the foreign currency accessed from the auction system as applied for.
“We want to see if the amount that has been allotted to a company on the auction system can match the goods that have been imported,” Mangudya said.
“The central bank would also want to monitor if the imported goods are not inflated and are of a reasonable price in an effort to ensure that some companies don’t use some outside entities to access forex from the auction system.”
The SI 127 of 2021 empowered RBZ to impose penalties on businesses accused of abusing foreign currency obtained from the auction system and those that price their goods and services above the ruling official exchange rate.
Last week, the RBZ published a list of 18 companies that were accused of abusing foreign currency they accessed from the auction with more set to be announced in the near future.
Some have been accused of diverting the money for other purposes, including the parallel market.
The companies accused by Mangudya of allegedly abusing the auction system are: 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 Investments, Classic Energy, Clorex Energy, Explochem, Mutare Mart & Exchange, Souzrce Fuels and Kimya Investments.
These companies are believed to be interested in yielding benefits from foreign exchange gains and not from production.
According to Mangudya, 40% of total allotted funds have been to importers of raw materials but the situation on the ground was not showing improvements on the production side.
Prices of basic commodities continue to shoot up despite the enactment of SI 127 of 2021 as the country’s economy remained highly informalised.
Confederation of Zimbabwe Retailers president Denford Mutashu said the move by the central bank would improve the efficiency of the auction system.
“If those companies that access the foreign currency from the auction system could be audited on how much money they accessed and how much they have used on importing, the efficiency of the auction system would greatly improve,” Mutashu said.
“If that could be done to the manufacturing sector, the prices of basic commodities would certainly stabilise as production and capacity utilisation will go up.”