‘Forex Auction System Working Magic’: Gvt

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By Alois Vinga

THE Ministry of Industry and Commerce says the Reserve Bank of Zimbabwe’s (RBZ) foreign exchange auction system is working magic and as seen by the surge in locally manufactured products as well as an increase in industry capacity utilisation.

Speaking to Business, Industry Ministry’s secretary Mavis Sibanda said the auction had prompted local manufacturers to boost production.

“The foreign currency auction platform has positively benefited local manufacture of goods – with local retailers now stocking close to 65% of local products. It is largely expected this stability will be sustained as inflation is anticipated to go downwards,” she said.

Sibanda said statistics gathered from the Confederation of Zimbabwe Industries (CZI) indicate that in the second quarter of 2021, the national industrial growth rate reached 56% as a direct result of the availability of foreign currency to manufacturers.

The industry leader said the RBZ forex allotments are working in favour of the revival of the industry as demonstrated by their growth through the increase in demand for local products and import substitution.

Sibanda added last year’s timely intervention by the RBZ, augured well for the National Development Strategy (NDS) 1 goal of retooling industry and boosting local production.

This week, the RBZ auction allotted a total of US$42.3 million to both the Main and Small to Medium Enterprises Auction (SME) sectors.

The main platform received US$34.5 million while the SME platform received US$7.7 million.

Priority allotments went towards raw materials, machinery, and equipment among other key allotments.

The official exchange rate weakened slightly to close trading at $85.50 against US$1.

Added Sibanda: “The timely reports coming through ZIMSTATS (Zimbabwe National Statistics Agency) on the performance of our exports and imports are in tandem with our real-time information that keeps a track of the performance of the manufacturing sector.

“In addition, the fiscal incentives on machinery and VAT (Value Added Tax) deferments have ensured that local companies import new equipment.

“The closure of (national) borders due to Covid-19 and the disruption of regional value chains has assisted the local industry to produce locally. The foreign currency allocation system prioritises raw materials and machinery offering an opportunity for local companies to re-tool.”

Zimbabwe National Industrial Development Policy has projected a 2% growth in the manufacturing sector while industry requires US$2 billion for the next five years.

The Industry Ministry said basing on the RBZ statistics from June 2020 to May 2021, the allotments through the auction system amounted to US$1,2 billion of which 42% was for raw materials and 18% for machinery and equipment.