Stakeholders have welcomed the Reserve Bank of Zimbabwe's (RBZ) move to allow Small to Medium Enterprises (SMEs) on the foreign currency auction system as a move that will go a long way in boosting their operations.
Yesterday was the first time the SMEs auction was conducted resulting in about US$460 167 being allotted. Just like the main auction, the bulk of the funds were allotted for raw materials as well as equipment. A total of 40 bids were received and 7 were disqualified. The highest bid was $85 while the lowest was $75. The weighted average rate remained at the same level of the main auction.
The foreign currency auction system was introduced by the RBZ as a means to dissuade businesses from turning to the parallel market in search of foreign exchange for essential imports.
The reliance on the parallel market had come with huge distortions which saw the local currency tumbling against the US dollar within a short space of time.
The introduction of the auction system has thus brought the much-needed stability that has afforded business the leeway to plan as well as slowing down inflation.
The system, however, only catered for large corporates but the RBZ has now introduced new regulations that will see those in the SMEs partaking.
The SMEs will be participating in a separate weekly auction that will cater for businesses that need foreign exchange from at least US$2 500 up to a maximum of US$20 000.
Women's Affairs, Community, Small and Medium Enterprises Development Minister Dr Sithembiso Nyoni said the move will afford the SMEs an opportunity to legally acquire foreign currency and thus grow their businesses.
"This is a welcome development from the monetary authorities as it furthers what the ministry has been working on which is to bring the SMEs sector on stream with the country's economic activities," said Minister Nyoni.
"As you know that the SMEs are now the biggest players in our economy, we envisage a situation where the economy at large will be the biggest winner.
"You are aware that most of them rely on imports to further their businesses so we hope this will go a long way in assisting them," she said.
Small to Medium Enterprises Association of Zimbabwe (SMEAZ) founder Mr Farai Mutambanengwe said the move was long overdue.
"The introduction of the SMEs foreign exchange auction is an overdue move by the Reserve Bank because obviously . . . the SMEs sector remained uncatered for and therefore we were forced into the parallel market when we needed foreign currency," said Mr Mutambanengwe.
"So at least now we have got a (legal) channel. It's not yet perfect, I will hasten to add, because for us the best avenue we have seen has been the bureaux other than the banks. The banks have tended not to be responsive to our SMEs needs.
"So what we hope is that once a rate emerges from the auction, this rate will then also be applied to the bureau de changes so that we have greater leeway," he said.