19 February 2019

Zimbabwe: CZI Lobbies for Currency Trading Platform

Zimbabwe's industrial representative body, the Confederation of Zimbabwe Industries (CZI) is lobbying Government to avail a platform for businesses to legally trade currency to cushion them from foreign currency shortages that are chocking operations, CZI president Silefani Jabangwe has said.

During the fourth quarter of last year several businesses had either closed down or resorted to selling their products in hard currency arguing that the shortages were adversely affecting business operations.

At its latest manufacturing sector survey, the association said it was anticipating a dip in capacity utilisation this year from the current 48 percent on the back of foreign currency and the increasing costs of doing business, a situation that Mr Jabangwe says could change if an efficient hard currency allocation platform is availed for business.

"It was not just the cost of doing business but the policies that were at play during that particular period, the policies relate predominantly towards one thing which is currency because in the fourth quarter of last year there was that one thing of the separation of Nostros then the criminalisation of trading in currency but there was no platform that was then created to see how business would access foreign currency.

"As business was saying if those things remain as they are you will see performance dipping because they would not have foreign currency to fund their operations and get raw materials which is why we are lobbying for the Monetary Policy Statement to at least includes the availing of a platform to trade currency because that is the biggest thing that would close that plunge in performance as compared to last year," said Mr Jabangwe.

The move comes following a move by the central bank to upgrade the Real Time Gross Settlement (RTGS) platform to include the United States dollar, although the platform which was expected to have gone live on the first of February has not come to fruition.

The development also comes at a time when economists are pushing Government for the creation of an inter-bank without the involvement of the central bank.

Renowned economist Eddie Cross is on record saying, "So what they need to do is to give banks the authority to start trading, I understand that has not happened yet, mainly for technical reasons, but I expect in this coming week (this week) banks will find a solution and what we will see then is, the banks will start trading and will get an official exchange rate for the RTGS dollar."

He said this will allow individuals and institutions to be able to buy hard currency in a local bank "and I am told that's a reality by some senior bank managers".

Mr Cross said moving to the next step of liberalising the exchange rate might, however, be delayed by arguments "at the top" about how far to go.

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