Taurai Mangudhla Senior Business Reporter
ZIMBABWE’S foreign currency shortages that culminated in a cash crisis have been worsened by growing economic activity. Finance and Economic Planning Minister Mr Patrick Chinamasa’s economic growth forecasts for 2018 are at 4, 5 percent, up from 3,7 percent in 2017, driven by growth in agriculture and mining as well as policy interventions across the board.
In his 2018 National Budget, Minister Chinamasa said economic growth is expected to be above 4, 5 percent in the outlook. As productivity and the economy grows, demand for foreign currency to support the development swells, Reserve Bank of Zimbabwe (RBZ) international banking and portfolio management deputy director Mr Ernest Matiza has said.
“I think there is more foreign exchange which we have received this year, but also what we have seen is the economy is picking, which implies that all sectors of the economy are demanding more foreign exchange in order for them to be able to operate,” Mr Matiza told a Chamber of Mines State of the Industry Survey report launch last Friday in the capital.
Matiza said the extractive industry requires a lot of foreign currency running into billions annually, with gold producers requiring about $70 million on monthly basis while platinum and chrome requirements are in the range of $100 million each month.
“If you are looking at all these sectors there is demand for electricity. If you look at it on a weekly basis we need to compliment what we are producing in terms of electricity by importing plus or minus $5 million worth of electricity (and) major demand for that electricity is from the mining sector,” he said.
“If you look at the gold sector there is also the small scale producers who are paid in cash so every week we need to import plus or minus $5 million to pay for that gold which is coming from the small producers,” Mr Matiza added. Other sectors of the economy also have their demands.
“Take your cooking oil, on average you need $5 million every week, your medicals you need $4 million every week, take your fuel which needs $50 million every month and which also goes to the mining sector.
“The suppliers on average $5 million every week so we are looking at $170 million which I receive, these are just basics (and) I have not even incorporated other sectors which come for raw materials for production as well.
This is not even enough, that is why we talk of a pronounced foreign exchange shortage but otherwise we have seen actually better,”Mr Matiza said. Between the month of August and December, foreign currency demands are exacerbated by fertilizer imports which cost the economy between $80 and $100 million, excluding agro chemicals which require an extra $25 million. If you look at the issues of foreign exchange, we have done very well as a country but also there is demand as the economy is also picking up,” he said.