‘Forex backlog hits US$600m’

The Confederation of Zimbabwe Industries (CZI) says the foreign currency backlog for the industry in the last seven months from September last year to March 2018 is now at US$600 million.

Staff Writer.

The business body representing the country’s manufacturing companies says a dry foreign currency spell during the period had worsened the forex situation.

CZI, however, is hoping to eliminate the backlog during the current tobacco selling season which commenced last month with fresh foreign currency allocations expected to start soon backed by commencement of the tobacco selling season.

Traditional tobacco merchants have to date mobilised US$824 million for the purchase of tobacco in this marketing season.

Zimbabwe normally experiences a foreign currency dry spell during the tobacco off season, fuelling the currency backlog.

As at end of March, most companies were at the end of lines in terms of forex utilisation.

CZI president Sifelani Jabangwe told businessdigest that said he had received assurance from RBZ for a list of allocations this week but said the main issue remains on how to repay the legacy debts.

“The RBZ has indicated that it will be starting forex allocations on the back of the starting tobacco season.

Hopefully, this week we will be getting the figures on what the allocation will be.

“But the issue is how best to manage current and the repayment of legacy debt that have accumulated as at this period its now at US$600 million since September for the whole industry. Certainly we have been hoping the tobacco season starts,” he said.

Jabangwe said the industry was now focusing on how to smoothen the September to March period and the future by not relying solely on RBZ allocations.

While there is increased demand for forex, Jabangwe said the number of companies have begun increasing their exports, a move expected to quicken less demand for foreign currency.

“In the past we used to have cotton. There in need to ensure that cotton production increases and that the companies themselves begin to export to generate own currency.

“We have noticed that large numbers have started starting to export. We need them not only to grow exports but to stop relying on local production which outs pressure on foreign currency demand,” he said.

CZI is also expecting the manufacturing industry to work closely with the Government on foreign currency allocations to avert food shortages, improve capacity utilisation and reduce cheap imports.