THE delay in the allocation of foreign currency to companies by the Reserve Bank of Zimbabwe (rbz) has resulted in businesses cancelling orders and suppliers doubling of prices to allow them to source the scarce forex on the black market.
By Kudzai Kuwaza
The development comes at a time when there is a debilitating liquidity crunch and an acute cash shortage that have severely crippled companies which need to import critical inputs for operations.
The high demand for foreign currency required to effect payments for goods and services sourced externally has seen the value of the bond note, which is supposed to be trading at par with the green back, declining by more than 50% on the black market. Prices of some basic doubled in last month.
Last year, the central bank came up with an import priority list for the efficient allocation of the scarce foreign currency.
However, in a wide-ranging interview with the Zimbabwe Independent this week, Zimbabwe National Chamber of Commerce (ZNCC) president Divine Ndhlukula said some companies have gone for more than a year without receiving their foreign currency allocation from the central bank.
“Business is failing to import raw materials because foreign payments are not being processed with some having been in the queue for over a year now. This has seen some cancelling orders due to these delays. Some local suppliers have even doubled prices to allow themselves to buy forex,” she said.
“The foreign currency allocation framework is not efficient as most of our members have to wait for months to be able to import and this promotes exploitative opportunities for speculators.”
Ndhlukula attributed the hike in prices of basic commodities to the acute shortage of foreign currency.
“Recent price increases were as a result of speculative hype and artificial shortages due to forex shortages, which is a reality, and has become a major challenge for local businesses that rely on imports for their inputs to produce local basic commodities,” she said.
“Panic was also being driven by the informal sector accumulating basic commodities to sell for US dollars cash.
There seems to be an emergence of errant bankers, and fuel dealers which has also resulted in parallel markets that saw the huge loss of confidence in the local currency and creating unnecessary uncertainty in the market.’’
Ndhlukula said there is need to increase foreign direct investment (FDI), which plummeted from US$545 million in 2014 to US$319 million last year, according to statistics from the United Nations Conference on Trade and Development.
“Any country’s economic success stems from a strong export sector, low unemployment, strong manufacturing sector and a balanced budget. We need new money into the economy from increased production hence the need for FDI and local investments,” Ndhlukula prescribed.
“An adoption of economically sound and clear policies, especially regarding the indigenisation legislation, is required, which will demonstrate a mixture of optimistic expectation and fervour to invest in Zimbabwe from both local and international investors. Consistency will help strengthen the operating environment which will avoid crowding out private sector investment through chronic fiscal deficits, which end up increasing the cost of funds as well as loss of market confidence.”
Employers’ Confederation of Zimbabwe recently revealed that they face expulsion from the International Organisation of Employers if they fail to pay their membership fee as they are still to access foreign currency from their account through the RBZ since April this year as the foreign currency shortages worsen.