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'Private sector frustrates interbank system'

by Staff reporter
30 Apr 2019 at 06:36hrs | Views
INDUSTRY and Commerce Minister Mangaliso Ndlovu has blamed the private sector for frustrating the success of the interbank foreign currency market by shifting goal posts and blaming Government for their shortcomings.

The Reserve Bank of Zimbabwe introduced the interbank foreign currency market in February in response to lobby efforts by industry executives who demanded the platform to access forex on a formal but free market system.

The measure, both parties had agreed, was meant to bring sanity to the financial services sector while promoting exports, diaspora remittances and investments into the economy.

Responding to questions from journalists during a press conference to mark the end of Zimbabwe International Trade Fair in Bulawayo on Saturday, Minister Ndlovu said Government was anxious about the ineffectiveness of the interbank foreign currency market.

"I'm quite worried by the assertion that the interbank is not working and the indication that Government could be in any way be behind that. When the interbank was introduced the exchange rate was in the official market around 2,5 if I'm not mistaken and the so-called grey market was trading at around 3,5.  

"They (private sector) said the Government was constraining the movement of the exchange rate, that Cabinet was controlling the exchange rate. But on its own the exchange rate has moved up," said Minister Ndlovu.

"I'm told the exchange rate is now above three, between three and 3,5 . . . those who are generating foreign currency apparently they are saying they're not happy with the rate."

Minister Ndlovu said the interbank foreign currency market was an idea that came from the private sector which argued that businesses were failing to access foreign currency from exporters.

"Their argument was that they do not have a way of accessing foreign currency from their colleagues because it's the private sector that generates foreign currency, it's not Government.

"So, they wanted us to provide a platform where the generators of foreign currency can dispose their excess foreign currency to the users of foreign currency for varying purposes," he said.

Two weeks ago, Minister Ndlovu said the private sector surprisingly indicated that it was not happy with the 3,5 exchange rate. Speaking at the International Business Conference during the ZITF, Confederation of Zimbabwe Industries president Mr Sifelani Jabangwe said companies were failing to access foreign currency through the interbank market.  

"Where is Government involved in all this? That's why I am saying we need to be genuine when we are discussing all these issues because we will be chasing a moving target when on the receiving end it's the general public," Minister Ndlovu queried.

"We may play with all these economic terms and the like, but there is evidence that Government has closed the tap on money supply, which the private sector had identified as the main driver of inflation and they had said then that Government is the one that is very active on the parallel market. Government is not in the parallel market and it will not be in the parallel market," he said.

The Minister said that Government was aware of what was happening on the interbank foreign currency market with people saying all sorts of things that they can never give a grain of evidence.

"But generally our expectation really is that the private sector among themselves should find each other, should be honest with each other. Do they want this to work?  

"It's the exporters, generators of foreign currency who have to offload their foreign currency to those who want to import. So, this overemphasis on Government distracts people from the right conversation, which has to be on the efficient price discovery of the exchange rate itself," said Minister Ndlovu.

Last week Vice President Dr Constantino Chiwenga also lashed out at corporates who are dipping their hands in the parallel market and equated such behaviour to financial terrorism given its negative effect on the economy. He warned that Government would deal ruthlessly with perpetrators.

Source - chronicle

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