Zimbabwe: ZNCC Slams Forex Auction Beneficiaries Demanding Higher Premiums

The Zimbabwe National Chamber of Commerce (ZNCC) has slammed local businesses for circumventing official exchange rates through pricing goods and services at premiums higher than the stipulated rates when they were major beneficiaries of the auction system.

The Reserve Bank of Zimbabwe (RBZ) last year incepted the Foreign Exchange Auction system which has been credited for stabilising exchange rates and slowing down both monthly and yearly inflation rates.

Despite close to 800 companies having benefited from the weekly Foreign Currency Auction Trading System, where US$639,5 million has been allotted since the introduction of the platform, many businesses continue to peg their goods at premiums which were higher than those obtaining in the official market.

Speaking to NewZimbabwe.com Business Monday, ZNCC president Tinashe Manzungu slammed the selfish practices and urged authorities to enforce compliance.

"There are errant businesses who are profiteering through such malpractices and in the process are indirectly contributing to inflation which appears to have stabilised.

"Apart from this, the siphoning of the money back to the black market will only benefit a few individuals at the detriment of the economy.

"It is prudent for the RBZ to ensure that authorised dealers and participants comply with auction rules to safeguard the auction from abuse," he said.

Companies like Blue Ribbon Foods have received US$10.4 million, Surface Wilmar US$9.8 million, National Foods US$8.3 million, United Refineries US$5 million.

Dendairy has also received US$4.8 million, Dairibord US$3.8 million, Innscor Distribution US$1.9 million, Colcom Foods US$1 million alongside other influential manufacturing brands in the country.

Many of the companies continue to enjoy double dipping as they acknowledge the positive impact brought about by the auction where they are getting foreign currency at premiums hovering around $83 for every US$1 while proceeding to sell their products at higher exchange rates.

A visit to Bakers Inn this week revealed that a box of fresh chips and Russian sausage which is sold for US$1 when paying using foreign currency requires ZWL130 when using local currency.

The practice is very common across the formal retail sector where commodities like 2 litre containers of cooking oil were each being sold for $350 in local currency and around US$3.20 in foreign currency.

Oil sector companies are among the auction's major beneficiaries.

Economist Doctor Prosper Chitambara said the worrisome trend was now common among both formal and informal sector players.

He attributed the developments to external cost pressures being experienced by businesses as well as indiscipline.

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