Black market forex unsustainable: CZI

By Prosper Ndlovu

The sourcing of foreign currency from the parallel market is not sustainable for industry operations and Government needs to capacitate the Reserve Bank of Zimbabwe (RBZ) to meet funding requirements for key raw material imports, an official has said.

Mr Joseph Gundani addresses chartered accountants at a meeting in Bulawayo yesterday.

Zimbabwe is grappling with acute foreign exchange shortages with several businesses now resorting to osiphatheleni (illegal money changers), who charge a higher premium with the US$:Bond Note exchange rate hovering around 1:1.3.

Due to cash shortages and limited forex reserves, the RBZ is not able to meet industry requirement levels and has since come up with a priority list in terms of formal allocations.

The situation has prejudiced some businesses who blame the forex shortages for frustrating their operations.

Economists also blame the high parallel market premium for price distortions that have weakened consumer spending.

“Buying foreign exchange from the ‘black market’ is not sustainable and as industry we have said we would rather engage the RBZ to provide the forex we want for critical imports,” said Mr Joseph Gunda, president of the Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter.

“Yes, the core issue at the moment is unavailability of forex from the RBZ. But we need to get the forex using the normal/formal channels through RBZ and not from the black market. If the RBZ is capacitated this can stimulate economic growth and exports.”

He said CZI as the dominant industry body would continue to lobby the Central Bank to address productivity concerns and urged local firms to engage the association about their needs.

Given the industry requirements, Mr Gunda revealed that his organisation was having meetings with the RBZ on a weekly basis to ensure that companies get foreign exchange through normal and official channels.

He said the obscene premium charged by osiphatheleni when seeking foreign exchange was partly to blame for price increases as producers pass the excess burden to consumers.

The CZI leader, who is also top manager at General Beltings, condemned profiteering by some businesses that were thriving on speculation to short-change consumers.

For instance, Mr Gunda said, there was no justification for brickmaking firms to hike prices when the clay soils they use were not being imported by sourced locally.

The country’s manufacturing sector has recorded a 5.5 percent growth in volume output this year compared to 2016, riding on a string of protectionist policies and fresh investments.

This is despite the slight drop in average capacity utilisation from 47.4 percent to 45.1 percent during the same period. According to CZI, the industry is facing a myriad of challenges that affect viability.

These include high costs of production, obsolete equipment, inadequate capital for retooling, competition from cheap imports, frequent garnishes from statutory bodies like Zimra and NSSA and high interest rates on loans.

Mr Gunda was speaking during a meeting organised by the Institute of Chartered Accountants in Bulawayo last Friday. The Chronicle