EXPORTING firms, which claim to be paying a heavy price on their Zimbabwe dollar liquidations, are lobbying the Reserve Bank of Zimbabwe (RBZ) to reduce the foreign currency surrender threshold to enhance viability.
Exporters are currently allowed to retain 60 percent of their earnings in forex, while the balance is sold to the RBZ in exchange for Zimbabwe dollars at the ruling auction exchange rate.
The liquidations are meant to oil the foreign currency auction market.
Government — in terms of the National Development Strategy (NDS1), a five-year plan for the period 2021-2025 launched in October last year — designated exports as one of the major drivers of private sector-led economic growth.
However, exporters claim that while they get Zimbabwe dollars at the official rate, they later incur disproportionately huge input costs due to the disparity between the official and open market exchange rates.
Although the official exchange rate remains largely stable at $86/US$1, the US dollar fetches around $150 on the alternative market, which includes a huge premium for speculators.
The Confederation of Zimbabwe Industries (CZI) says engagements were ongoing with the central bank and the parent ministry to find ways in which the concerns of exporters could be resolved.
“The exporters want the authorities to reduce what the Government or the Reserve Bank takes. The exporters . . . feel that the surrender requirement must be reduced. So, we continue to engage the authorities with that request,” said CZI president Mr Kurai Matsheza.
Another industry executive, who commented on condition of anonymity, said industry, through CZI, was due to hold discussions with the central bank and the Ministry of Industry and Commerce to resolve the sticking issues.
The executive said exporters were being left with insufficient forex to meet their requirements.
The central bank recently revealed that the auction system, which was introduced on June 23 last year and is mainly funded from proceeds of liquidations by industry and other exporting sectors like mining and agriculture (mainly tobacco), has to date disbursed over US$1,7 billion.
RBZ Governor Dr John Mangudya credits the auction system for facilitating price discovery of the Zimbabwe dollar and ushering in macroeconomic stability.
The inflation rate has also declined from a post-dollarisation high of 837,5 percent in July last year to a two-year low of 50,2 percent last month.
Apart from the auction, the interbank foreign exchange market, which uses the auction-determined rate, is still operational.
The interbank foreign exchange market traded around 7 percent of total market transactions from January to July 2021, while round 63 percent of the market transactions were processed through bank customers’ foreign currency accounts.
Manufacturing and mining companies have been lobbying monetary authorities to reduce the surrender threshold to less than 30 percent or to further liberalise the foreign exchange market.
RBZ has since introduced the incremental export incentive scheme, under which exporters can retain up to 80 percent to 100 percent depending on performance.
The value of merchandise exports from Zimbabwe totalled US$4,4 billion in 2020, representing a 2,7 percent increase from a year earlier.