Reserve Bank of Zimbabwe in drive to grow forex earnings

Reserve Bank of Zimbabwe Governor Dr John Mangudya is making frantic efforts to grow Zimbabwe's foreign currency earnings across industry in a bid to address foreign currency shortages that resulted in a cash crisis.

Dr Mangudya is concerned about the cyclical nature of foreign currency earnings in the country, mainly driven by gold, platinum and tobacco and is encouraging other economic sectors such as manufacturing to grow exports and help reduce foreign currency shortages.

Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe said Dr Mangudya had discussed solutions to persistent foreign currency shortages with the CZI board at a meeting in the capital yesterday.

"We have been facing foreign currency shortages and the Governor did say that. He also indicated that the cyclical nature of our tobacco foreign currency receipts, for instance, is a challenge. The foreign currency earnings fall for five to six months between the end of a season and the beginning of another one yet the country needs foreign currency every day," Mr Jabangwe yesterday told The Herald Business in a telephone interview soon after the crucial meeting.

"The governor encouraged companies to export more and generate foreign currency for the economy. He also said Government was working on a sizeable loan to help with the foreign currency situation," he said.

This comes after Dr Mangudya earlier this month, in his Mid-term Monetary Policy Statement, indicated fresh facilities amounting to $1 billion for export support initiatives.

These include fresh injection of $300 million worth of bond notes which are an incentive of up to 10 percent on exporters and diaspora remittances. This will put total bond notes in circulation at $500 million as Government pushes to grow foreign currency receipts. Dr Mangudya reiterated that Zimbabwe is facing foreign currency shortages and not cash shortages.

Mr Jabangwe said manufacturing was currently contributing only 5 percent to export receipts which are estimated at around $4 billion. Zimbabwe remains a net importer with a trade deficit averaging $3 billion annually.

This, he said, meant manufacturers were a net consumer of foreign currency hence the need to grow exports in the sector.

The CZI president said manufacturers were struggling to keep afloat due to working capital constraints with some players going under. He said the sector is seeking extension of the import restrictions to include a list of additional products.

"We still have companies that need to resuscitate and we need to identify more products for removal from the general import licence," Mr Jabangwe said.

The manufacturing sector has benefited immensely from Government's intervention by way of banning importation of selected products without prior clearance under SI 64. The move was meant to protect local industry from the influx of imports. The meeting also discussed the import priority list amid concern some banks were not respecting the central bank guidelines.

"We resolved that we will work together with the central bank to ensure companies get what they should get. However there is a challenge where companies do not have the balances when their allocation finally comes and this means they miss out so we want to address this,"Mr Jabangwe said.

""We are saying banks must stick to the priority list given by Government."

Efforts to get a comment from Dr Mangudya were fruitless.