The Confederation of Zimbabwe Industry (CZI) says manufacturers are struggling to obtain foreign currency from the Willing Buyer Willing Seller (WBWS) platform needed to import critical raw materials.
CZI CEO, Sekai Kuvarika said that while there has been a bit of stability in the market, businesses are finding it difficult to get foreign currency. Said Kuvarika (via Business Times):
This is a serious issue. The manufacturers are failing to access forex for their businesses and we are still engaging the monetary authorities over the issue.
We believe that we have a bit of stability in the market but we have some serious issues on failing to access forex.
The challenge is that companies are not accessing the forex they require for the importation of raw materials.
As you know the manufacturing sector in Zimbabwe is highly import-dependent, over 70% in most of the cases.
Kuvarika added that the CZI, which is the country’s biggest business lobby group, has engaged the Reserve Bank of Zimbabwe governor, John Mushayavanhu over the matter. Said Kuvarika:
We have met the governor to discuss the piling of ZiG due to limited access to foreign currency to bring raw materials.
From our conversations, the RBZ seems to be taking the law of averages into play where he argued that manufacturers may have significant US$ local sales therefore their forex requirement may not be very high.
Rufaro Zengeni, an economic analyst, said the WBWS platform needs to be liberalised. Said Zengeni:
We have these contradictions where people are not allowed to bid higher if the RBZ has fixed the exchange rate; there would not be this shortage.
There is a shortage of forex and the prices have not moved in the past three months, something is wrong with those propositions as they don’t reconcile.
We still have a price discovery mechanism problem in the economy.
Economist Prosper Chitambara said that the shortage of forex on the official market fuels ZiG devaluation and inflation. He said:
It seems that there are no willing sellers of foreign exchange to meet the high number of willing buyers.
This means a lot of businesses are having to seek recourse to the parallel market to get foreign exchange and this explains the depreciation of the ZiG due to the strong demand for the US$ which is not matched by the supply on the official market.
This is basically the mismatch between the forex and available supply on the formal market.
Another economist, Gift Mugano said some businesses are managing to get only a fraction of their forex requirements. Said Mugano:
Business executives told me that they are failing to access forex from banks with some securing only 5-10% of their forex requirement notwithstanding the assurances given by the RBZ.
Due to the high demand of US$, exchange rates have started running away to the range of between ZiG22.30/US$1 and ZiG24/US$1.
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