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30% surrender requirement sparks export concerns
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The Zimbabwean export sector, a vital source of foreign currency and a key pillar of economic stability, is expressing growing concern over the Reserve Bank of Zimbabwe's (RBZ) recent increase in the foreign currency surrender requirement from 25 percent to 30 percent. This measure, announced earlier this year in the 2025 Monetary Policy Statement (MPS) by RBZ Governor Dr. John Mushayavanhu, is feared to be gradually suffocating exporters and undermining recent export-led growth gains.
Under the 2025 MPS, presented under the theme "Fostering Prices, Currency and Exchange Rate Stability through Balancing Confidence, Trust, Credibility, Efficiency, Stability and Growth," Dr. Mushayavanhu detailed a range of policies intended to strengthen the Zimbabwe Gold (ZiG) currency. Central among these is the reduction of foreign currency retention levels by exporters from 75 percent to 70 percent, effectively raising the mandatory surrender portion of export proceeds to 30 percent.
The RBZ justifies this adjustment as necessary to boost foreign currency supply on the formal market, build critical reserves, and support the wider adoption of ZiG, with the ultimate goal of making ZiG Zimbabwe's sole transaction currency by 2030.
However, many exporters argue the move threatens their competitiveness and survival in an already challenging environment. Proplastics, a prominent manufacturing exporter, lamented in its recent quarterly report that the increase in surrender requirements has severely compromised their ability to compete internationally.
"The increase from 25 percent to 30 percent surrender has not only eroded the competitiveness of our exports but also impacted our market positioning and overall exporting viability," the company stated.
Exporters rely on retained foreign currency to finance the importation of raw materials, pay offshore service providers, and hedge against local currency volatility. Reduced retention forces many to seek foreign currency from the parallel market, known for its unfavorable and volatile rates, further squeezing profit margins.
Adding to the criticism, Tanganda Tea Company's Finance Director, Mr. Henry Nemaire, expressed concerns via LinkedIn, describing exporters as "geese laying the golden eggs" whose value is being taken away to subsidize importers, thus distorting economic incentives.
Mr. Nemaire argued, "This policy discourages exports and inadvertently encourages imports, undermining Zimbabwe's goal for a balanced and sustainable economic model." He noted the policy fails to generate revenue for the Treasury, does not redistribute income equitably, and misaligns fiscal incentives.
These concerns come amid data suggesting Zimbabwe's exports are on the rise. Zimbabwe National Statistics Agency (ZimStat) reported total exports increased to US$7.43 billion in 2024, up from US$7.2 billion in 2023. Key exports include semi-manufactured gold, tobacco, platinum, and tea. Yet, much of this growth is concentrated in a few commodity sectors, raising questions about the sustainability of export diversification under the current policy.
The core challenge lies in balancing short-term monetary stabilization goals with long-term export sector competitiveness. While the RBZ's policy aims to stabilize foreign exchange markets and build confidence in ZiG, exporters warn that these efforts may inadvertently throttle the very sectors critical to achieving economic stability.
Exporters find themselves in a bind—torn between supporting national monetary goals and preserving their businesses' viability and global competitiveness.
Experts say resolving this tension will require meaningful dialogue between government and industry stakeholders, transparent policy-making, and a recalibration of incentives within Zimbabwe's economy.
For Zimbabwe to successfully establish ZiG as its sole currency by 2030, it must protect and nurture the export sector—the backbone of its foreign currency generation—rather than weaken it.
Ultimately, the nation faces a delicate balancing act: pursuing monetary stability without sacrificing growth, trust, and competitiveness in the process.
Under the 2025 MPS, presented under the theme "Fostering Prices, Currency and Exchange Rate Stability through Balancing Confidence, Trust, Credibility, Efficiency, Stability and Growth," Dr. Mushayavanhu detailed a range of policies intended to strengthen the Zimbabwe Gold (ZiG) currency. Central among these is the reduction of foreign currency retention levels by exporters from 75 percent to 70 percent, effectively raising the mandatory surrender portion of export proceeds to 30 percent.
The RBZ justifies this adjustment as necessary to boost foreign currency supply on the formal market, build critical reserves, and support the wider adoption of ZiG, with the ultimate goal of making ZiG Zimbabwe's sole transaction currency by 2030.
However, many exporters argue the move threatens their competitiveness and survival in an already challenging environment. Proplastics, a prominent manufacturing exporter, lamented in its recent quarterly report that the increase in surrender requirements has severely compromised their ability to compete internationally.
"The increase from 25 percent to 30 percent surrender has not only eroded the competitiveness of our exports but also impacted our market positioning and overall exporting viability," the company stated.
Exporters rely on retained foreign currency to finance the importation of raw materials, pay offshore service providers, and hedge against local currency volatility. Reduced retention forces many to seek foreign currency from the parallel market, known for its unfavorable and volatile rates, further squeezing profit margins.
Adding to the criticism, Tanganda Tea Company's Finance Director, Mr. Henry Nemaire, expressed concerns via LinkedIn, describing exporters as "geese laying the golden eggs" whose value is being taken away to subsidize importers, thus distorting economic incentives.
Mr. Nemaire argued, "This policy discourages exports and inadvertently encourages imports, undermining Zimbabwe's goal for a balanced and sustainable economic model." He noted the policy fails to generate revenue for the Treasury, does not redistribute income equitably, and misaligns fiscal incentives.
These concerns come amid data suggesting Zimbabwe's exports are on the rise. Zimbabwe National Statistics Agency (ZimStat) reported total exports increased to US$7.43 billion in 2024, up from US$7.2 billion in 2023. Key exports include semi-manufactured gold, tobacco, platinum, and tea. Yet, much of this growth is concentrated in a few commodity sectors, raising questions about the sustainability of export diversification under the current policy.
The core challenge lies in balancing short-term monetary stabilization goals with long-term export sector competitiveness. While the RBZ's policy aims to stabilize foreign exchange markets and build confidence in ZiG, exporters warn that these efforts may inadvertently throttle the very sectors critical to achieving economic stability.
Exporters find themselves in a bind—torn between supporting national monetary goals and preserving their businesses' viability and global competitiveness.
Experts say resolving this tension will require meaningful dialogue between government and industry stakeholders, transparent policy-making, and a recalibration of incentives within Zimbabwe's economy.
For Zimbabwe to successfully establish ZiG as its sole currency by 2030, it must protect and nurture the export sector—the backbone of its foreign currency generation—rather than weaken it.
Ultimately, the nation faces a delicate balancing act: pursuing monetary stability without sacrificing growth, trust, and competitiveness in the process.
Source - zimpapers
