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Business slams Mthuli Ncube's forex committee

by Staff reporter
07 Jan 2019 at 08:39hrs | Views
BUSINESS leaders say the setting up of a forex allocation committee by government will not solve the prevailing foreign currency crisis.

Finance minister Mthuli Ncube last Friday set up a forex allocation committee comprising four members from the central bank, two drawn from the Finance ministry and one each drawn from Industry and Commerce, as well as Energy and Power Development ministries.

Government is under pressure to provide foreign currency for the procurement of drugs, fuel, wheat and critical raw materials for the industry, a situation that has seen some companies pricing their products in United States dollars.

Last week, government shot down Delta Corporation's move to sell its products in US$.

Zimbabwe National Chamber of Commerce chief executive Christopher Mugaga slammed the setting up of the committee, describing it as a charade.

"Seeing this forex allocation committee composition is proof that whoever set it doesn't understand our challenges, let alone solving them. You can't have the cake and eat it simultaneously," Mugaga posted on microblogging site, Twitter.

"Medieval banking is when you choose to set up a forex allocation committee, worse still compromising bureaucrats who are there to empower Reserve Bank of Zimbabwe even more. Forex generators like miners and tobacco farmers are sitting in a room wondering whose forex will be under the purview of this kangaroo committee."

Economist Kipson Gundani said government must accept the reality that the bond note cannot be equated to the US$.

"To me, putting a committee does not address the real problems affecting this economy. Which forex will this committee allocate? By now, government should know that they should allow the bond note to freely compete with the US$, not this 1:1 fiction. They should allow the market to allocate forex," he said.

"These problems have been addressed with a wrong prescription. Why is it government's business to allocate forex to fuel dealers? They are finding themselves in this mess because they have created this artificial economy."

Gundani said "committee or no committee, we are in a fix", adding government must allow the issue of market forces to play, that is through the law of demand and supply.

"There should be an open auction for a willing-buyer and willing-seller. They are trying to sustain the inevitable. The system will erupt and collapse," he said.

Industrialist Busisa Moyo called for a weekly or quarterly public report on forex allocation by the central bank to enhance transparency.

"I think the allocations should just be made public and transparent, each week on Wednesday after allocations on Tuesday. (It should be) reported publicly, quarterly and we should be good. We are not looking for extra work. Running factories is already tough and a full time job," Moyo commented on Twitter.

Source - newsday