RBZ fails to release forex to exporters, miners, NGOs

ZIMBABWE’s exporters and gold mining companies are on the verge of collapse because they cannot access their foreign currency which is held by the Reserve Bank of Zimbabwe (RBZ).

Businessdigest understands that the RBZ has failed to release the funds into foreign currency accounts (FCAs) on time since November last year forcing major exporting companies and gold miners to scale down operations.

Gold production is at its lowest level since 2000. Exporting companies have reduced production because they don’t have working capital.

Non-government organisations and civic organisations are also battling to get their forex from the RBZ. Some NGOs have applications dating back to as far as December last year.

The Confederation of Zimbabwe Industries (CZI), the Zimbabwe National Chamber of Commerce (ZNCC) and the Chamber of Mines this week wrote to the Ministry of Finance, which was copied to the RBZ, complaining about the situation indicating that some companies could be forced to shut down if the monies are not released immediately.

The three groups also requested the Finance ministry to facilitate a meeting with the central bank to find a solution to the crisis which now threatens more than 25 000 jobs.

They also requested the ministry to intervene and force the RBZ to relinquish the FCAs back to commercial banks.

ZNCC president Marah Hativagone confirmed that they had written to the ministry appealing for the urgent release of the foreign currency.

“We indeed wrote to the RBZ as a combined body of ZNCC, CZI and the Chamber of Mines complaining on the matter,” she said.

The RBZ is however yet to reply to the letter.

In the monetary policy statement announced in September 2007, the RBZ forced banks to surrender all their client’s corporate FCAs to the central bank.

Since then attempts by the export sector and the mining community to access their funds on time have been futile with banks now reportedly keeping “paper FCAs” to mirror the accounts at the central bank.

Exporters are required by the RBZ to keep 65% of their export proceeds in their FCAs and are forced to liquidate 35% of their export proceeds at US$1:$525 000.

Sources said there was a strong belief in the market that the foreign currency was used for other things.

“We believe there is nothing in our accounts. All efforts by holders of FCAs to get their funds released have been in vain. There is despair in industry as there are no signs they will get their forex anytime soon,” said one source.

The gold mining sector is the most affected. Information gathered this week shows that some mines have not been paid for their gold deliveries to the RBZ since October last year.

Production for 2008 is already threatened with mining experts saying it could be as low as three tonnes.

The sector is operating at less that 15% of capacity due to working capital problems caused by the late payments from the RBZ.

Mines require foreign currency to import fuels, chemicals and equipment. Some mining companies are flooded because they don’t have the foreign currency to import spares parts for their pumps.

Production at Metallon Gold, Zimbabwe’s biggest gold producer, has also slumped. For example Metallon’s How Mine in Bulawayo which normally produces more than 150kg per month only managed 25kg in January. The target for February is 18kg.

RioZim is also struggling to maintain production.

“If authorities don’t change their attitude towards gold producers, then production in 2008 is set to be around three tonnes,” said one mine manager.

“This is sad because we can actually produce a conservative figure of between 15 and 20 tonnes of gold per year. By failing to pay the gold producers on time, the country lost about 10 tonnes in 2007,” he said.

Gold production has been waning for the past eight years. Last year, gold deliveries to the RBZ were 6,75 tonnes as compared to 11 tonnes in 2006.

“We made numerous representations to the RBZ since early 2007 and even started monthly meetings with them hoping that payments would be honoured. The monthly meetings were abandoned as the RBZ simply did not respond to requests for meetings with the industry,” the official said.–Kuda Chikwanda