Zimbabwe is targeting US$7bn worth of foreign currency receipts by year end from minerals, tobacco exports and diaspora remittances, but the country’s growing import bill continues to pile pressure on export earnings, a Reserve Bank of Zimbabwe (RBZ) official has said.
For much of this year, the country has grappled with serious forex shortages, erratic fuel supplies, and intermittent electricity supplies. The RBZ once had a priority list of the critical raw materials that needed to be imported, but that died a natural death after the introduction of the interbank forex trading platform in February this year.
RBZ deputy governor Kupukile Mlambo told Business Times that the country was expected to earn more foreign currency from Zimbabweans living abroad.
“We are expecting forex receipts of US$7bn by year end which is an improvement from US$5.5bn last year due to minerals, tobacco, cotton, improved diaspora remittances and the usage of free funds. That money is enough to cater for all our forex needs,” Mlambo said.
Zimbabwe earned US$5bn from January to September 2019, an amount which Mlambo said should have alleviated the forex situation, given the size of country’s economy.
“Despite not having foreign direct investments (FDI), our country has more foreign receipts than other better-performing economies in Africa and we are not supposed to be short of foreign currency,” Mlambo explained. “It is no longer RBZ’s responsibility alone but also the banking sector which now does business on the interbank trading platform.”
Gold is the country’s highest forex earner contributing 38% of the country’s forex reserves, followed by tobacco at 19%. Mlambo feels that more needs to be done to improve the interbank system for companies to get forex for critical resources. Zimbabwe also generates foreign currency mainly from horticultural products and cotton to international markets.
Trade experts believe that the nation should focus on trade and investment that promote the growth and development of the export sector to improve foreign currency inflows into the country. Economist Persistence Gwanyanya told this publication that the government should learn to carefully utilise its forex to improve the economy.
“We are generating enough foreign currency for the economy but negligence on our part is destroying the economy as there are some people who are abusing forex for their personal gain. There should be investigations as to where those monies are going,” Gwanyanya said.
Recently, Sakunda Holdings was in the eye of the storm for allegedly abusing Command Agriculture funds amounting to US$3bn a year. Experts believe this is a classic example of the firms that abuse forex but get away with it because of their closeness to the authorities.
It is believed that more should be done for the manufacturing sector to contribute meaningfully to the country’s export earnings.
Currently, the sector contributes 10% to GDP, because it is weighed down by low productivity due to a host of challenges facing the economy