President Mnangagwa has hailed the Reserve Bank of Zimbabwe initiated foreign currency auction system saying the bulk of US$147 million invested in industry came from the platform thereby pushing capacity utilisation.
In his weekly column published in The Sunday Mail, the Head of State and Government said while there were few misguided elements abusing the system, the primary goals for which it was established that of retooling industry had been met.
He said it was pleasing that the latest sector survey of the Confederation of Zimbabwe Industries noted that capacity utilisation in the manufacturing sector jumped to 56,52 percent in 2021, up from 47 percent recorded the year before, in 2020.
President Mnangagwa noted that currently, capacity utilisation stood at 66,6 percent.
"Industry is growing. The same survey goes further: firms invested US$147 million towards new capacity, creating a capacity gain of 25,6 percent. Because of this sterling investment activity, 57 percent of manufacturing firms registered an increase in sales, with the whole sector realising a 5,5 percent increase in exports that is from US$383 million in 2020, to US$404 million in 2021," said President Mnangagwa.
"A key detail struck me from the CZI survey: much of the US$147 million invested in new capacity came from the Reserve Bank of Zimbabwe's foreign currency auction system! This is salutary, given negative comments we often get on the foreign exchange auction system."
He said despite disbursement bottlenecks that have in some instances been associated with the foreign currency auction system, it had led to remarkable impact in the economy.
"Why forex auction? We created that system to help industry retool, and to increase its access to affordable raw materials through better access to foreign exchange.
"While the auction system has not always been able to disburse on time, and while we have had a few miscreants who have sought to abuse it, the overarching goals for which the facility was established are beginning to be met, with remarkable impact on the economy," said President Mnangagwa.
His remarks fly in the face of some elements who had sought to discredit the foreign currency auction system saying it was characterised by a number of irregularities.
President Mnangagwa said increased industrial activity will go a long way in meeting the country's import substitution goals in enhancing the country's overall economic performance through value-added exports, and in creating more employment, especially for youths.
"While the auction system has created another exchange rate in the economy, thereby causing possible arbitrage, this is a matter we are looking at," he said.
President Mnangagwa said the economy reveals multi-layered, structural disequilibria both at real and financial levels thereby spawning repeated cycles of instability and volatilities.
"Indeed, this is what makes us a comparatively better earning economy yet one that suffers repeated bouts of imbalances. There is wanton indiscipline and defiance bred by the unchallenged sway which some corporates, both in the real economy and the financial sector, have on the market."
That sway comes with entrenched monopolies and monopolistic malpractices.
"It doesn't matter which sector you look at: we are a one-enterprise, all-key-commodities producing monopolies dictating to the national markets," he said.
As a way forward, President Mnangagwa said the Ministry of Industry and Commerce must speedily work together with all Ministers of State, Zimbabwe Investment Development Agency and ZIMTRADE to map value chains province by province for consideration by Government as a matter of urgency.
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"Second, preferably in the Mid-Term Budget Review, the Ministry of Finance and Economic
Development must work on operationalising the much-stalled Sovereign Wealth Fund setting up Venture Capital Fund and in consultation with Ministries of Industry and Commerce and that of labour and Social Welfare advise Government on instruments and agencies already in place which require refocussing and realignment and readiness refocussing and implementation of rural industrialisation," he said.
He also said the Ministry of Foreign Affairs and International Trade and related
Agencies and Ministry of Finance and Economic Development must develop incentives for both local and foreign investors who elect to invest in value chains for rural areas, and in sectors manufacturing basic commodities, to bring about the much-needed competition.
