Government working on increasing forex allocations

01 Mar, 2020 - 00:03 0 Views
Government working on increasing forex allocations Minister Dr Sekai Nzenza

The Sunday News

Dumisani Nsingo, Senior Business Reporter

THE Government is working towards increasing foreign currency allocation obtained by players in the manufacturing sector for the importation of raw materials through the interbank market as it moves to ensure improved production capacity by local firms.

Industry and Commerce Minister Dr Sekai Nzenza told Sunday News Business in an interview that her ministry was deliberating with the Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe (RBZ) to consider increasing foreign currency allocation to manufacturing firms in accordance to their needs.

“Foreign currency allocation is a major outcry from a lot of businesses within industry. They require the foreign currency to import raw materials. So, we as the Ministry of Industry are in conversation with the Minister of Finance (Professor Mthuli Ncube) and also the RBZ Governor (Dr John Mangudya) in order for us to get an increase in the foreign currency allocations but as you know we are going through difficult times as a country,” she said.

Dr Nzenza, however, noted that part of her ministry’s strategy for 2020 was premised on import substitution through identifying products that can be manufactured using locally obtained raw materials.

“As the Ministry of Industry and Commerce one of our key strategies is import substitution so as to promote local manufacturing while increasing growth and productivity. So, while we do need foreign currency for some of the raw materials, our key strategy in 2020 is to identify those products that can be manufactured within Zimbabwe and those products that can be exported, so we can generate foreign currency. Import substitution will look at key products, for example glucose. We grow a lot of sugar cane here but at present we are importing glucose. So, the Ministry of Industry and Commerce is looking at innovative ways to increase local production so that we can increase growth, productivity as well as create jobs,” she said.

Captains of industry lamented that inadequate foreign currency allocations through the interbank market was impacting negatively on companies’ productivity.

Confederation of Zimbabwe Industries vice-president Mr Joseph Gunda said most companies were failing to access adequate foreign currency through the interbank market.

“The feedback that we are getting from most of the manufacturers that we deal with, they seem not to be getting enough (foreign currency allocation). There isn’t enough that is coming through to cover all our requirements,” he said.

Mr Gunda said industry had suggested that RBZ allocates the foreign currency on a regional basis as a way of enhancing transparency. 

“We had suggested to have regional allocation where perhaps Matabeleland region or Bulawayo companies can be allocated so much and that way there can be transparency whereby it will be known that so much has been allocated to companies and we can actually be accountable and know that such a company was allocated so much and imported so much (in terms of raw material). At the moment we really don’t know whether the foreign currency allocation is really going to the manufacturing sector or its going to other sectors,” he said.

Mr Gunda said the prevailing foreign currency shortages in the country were hurting the manufacturing sector since most companies heavily rely on imported raw material for production.

“Shortage of foreign currency does affect us as industry because that’s our core for procurement of raw materials and in some cases, companies import raw materials to the magnitude of 50 to 80 percent because we don’t have it locally to manufacture some of the products,” he said.

Association for Business in Zimbabwe (Abuz) Mr Victor Nyoni said the situation was dire as some companies are yet to get any foreign currency allocation through the interbank market. 

“When the interbank market facility started there was some kind of improvement in terms of forex allocation but of late it has totally gone dry. Companies are struggling a lot, with some not even getting the foreign currency at all. When we engaged the Treasury department, they told us that the gap between the black market and the official rate has caused those that have forex to hold onto it and therefore not release it to the industry and that has created a challenge for the industry,” he said.

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