Indians mull barter to ease forex woes

The Indian business community has proposed the use of barter trade with their Zimbabwean counterparts, to ease the foreign exchange crisis bedevilling the economy.

In an interview on the sidelines of the CBZ International SME Indaba held in Bulawayo recently, head of the Indian delegation representing businesses, Rajshekhar Ray, proposed the use of barter trade as a way of eliminating the foreign exchange crisis.

"One of the solutions is, for example, we are trying to work on a barter system. A barter … meaning if I provide you machinery over here, let's say I supply over a $1 million machinery, instead of taking cash I may take out something from Zimbabwe that is required in my country that Zimbabwe is producing in abundance, at a very competitive price," he said.

"So that is how one of the ways we can eliminate the foreign exchange crisis, because it's simple $1 million of machinery, so the Zimbabwean company is able to generate more money using those machinery."

Zimbabwe is facing a foreign currency crisis, with companies struggling to import raw materials.

Ray said some of the things they were eyeing for barter exchange were food stuffs and from textiles.

"Let's say food stuff, Zimbabwe is good in exporting tobacco. We are looking at the textile industry of Zimbabwe, where right now currently 70% of Zimbabwe's cotton is being exported. Now we are trying to do the value-add of that in excess because it was being done 30 years ago, you had a very vibrant textile industry," he said.

Ray said the business community was positive that change is already happening in Zimbabwe and their role was to keep going "irrespective, which government is there because for us, it's about livelihood"

Ray, a Fabtech Technologies International Ltd official, said he was personally "a very big ambassador for Zimbabwe in my country, business community, because I have seen the opportunity".

"I came here as a 10 year-old, the first time I landed in Zimbabwe it was just after independence, so it's just sometimes destiny has different things for different nations but it's about leadership at the end of the day"

Zimbabwe is currently facing foreign exchange crisis which has seen local companies struggling with repatriating dividends to foreign shareholders.

Local financial institutions have been battling to meet foreign payment obligations on the back of low nostro balances, as foreign currency shortages in the country persist. As a result, businesses, especially manufacturers and mines, have been struggling to make foreign payments.