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Companies earn seat on forex allocation platform

BY MTHANDAZO NYONI

THE Zimbabwe National Chamber of Commerce (ZNCC) is set to deploy representatives to the foreign currency auction system every week to work with the central bank during the allocation of allotted funds, according to the organisation’s president, Tinashe Manzungu.

This follows an agreement between the ZNCC and the Reserve Bank of Zimbabwe (RBZ) at the chamber’s annual congress last week that transparency in the allocation of foreign currency at the official market must be enhanced.

Manzungu, who spoke to businessdigest after the congress, said the ZNCC was unhappy with the way the central bank was handing allotments.

He said the ZNCC wanted to assume an active role and ensure that only deserving participants gain access to funding.

Introduced in June last year, the foreign currency auction system has been credited for helping thousands of firms gain access to cheaper foreign currency after struggling to buy United States dollars on an expensive black market.

Banks, which are said to be sitting on US$1,7 billion in their foreign currency accounts, have maintained a decade-long cautious lending approach in Zimbabwe, where default risks have been amplified by turmoil in industries.

Until recently, most companies had acknowledged how the foreign currency auction system, which has pumped about US$2 billion into companies since its launch, has helped them avoid falling into bankruptcies.

However, the platform has run into problems triggered by liquidity problems in Zimbabwe, where the RBZ estimates that between US$500 million and US$1,5 billion could be held up in the black market.

Manzungu said last week’s deal was progressive.

“The hot one (issue discussed at the congress) was on the foreign currency auction system,” the ZNCC boss said.

“We agreed with the RBZ to be part of the committee that oversees the allocation of funds. From now going forward,we will second our representative to oversee how they are allocating. We are not happy with how the forex is being allocated,” he said.

“People have been allocated money but were they the rightful people?Is this being done on fairness? There were questions about that, and this is something that is also causing arise in demand. As long as 70% of our people in the chamber are accessing foreign currency through illegal channels, through the parallel market, that shows we are not yet ready to resolve stability issues.

“We are saying at least 70% of our people should be getting money the right way. This is one of the burning resolutions that came out,” Manzungu added.

Central bank statistics produced during the congress showed that up to US$1,5 billion could be circulating in the black market, where rates have spiralled up to US$1:ZW$200, dampening ongoing recovery efforts.

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