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OpenForeign Currency Retention Cut Threatens Zimbabwe's Horticulture Sector, Says Nielsen
The Horticultural Development Council (HDC) has expressed concern over the Reserve Bank of Zimbabwe’s (RBZ) decision to reduce the foreign currency retention threshold for exporters from 75% to 70%.
HDC CEO Linda Nielsen said that this policy change poses major challenges for Zimbabwe’s horticulture sector, which depends on foreign earnings to sustain operations, drive growth, and remain competitive in global markets. Said Nielsen:
The horticulture industry operates within tight cost margins, with most inputs such as power, fuel, seed, fertilisers, packaging, and freight-denominated in US dollars.
The reduction in forex retention means exporters will have less hard currency to meet these critical expenses, placing strain on cash flow and investment in the sector.
Producers of export-oriented crops such as peas, which have high production and logistics costs, may be forced to scale back operations.
Some farmers may pivot to alternative crops and shift focus to local cash markets, which do not provide the same foreign currency inflows or long-term economic benefits as exports.
Nielsen reiterated the HDC’s previous recommendation that local utility providers, such as ZESA and municipal authorities, should charge for their services in ZiG to align with the new foreign currency retention framework.
She explained that exporters are currently required to pay many domestic obligations in foreign currency, creating an imbalance where they retain less forex while still facing high USD-denominated costs.
The HDC argued that adjusting local utility pricing to ZiG would ease the financial pressure on exporters and support the broader shift towards the use of the local currency.
In this regard, Nielsen urged policymakers to engage with the sector to find solutions that balance the need for foreign currency reserves with the long-term sustainability of Zimbabwe’s horticulture industry.
She added that a stable and predictable policy environment is essential for maintaining Zimbabwe’s competitiveness in regional and global horticulture markets.
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