By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ)’s foreign exchange auction annual allotments for 2021 totalled US$1,9 billion.
The platform has firmly established itself as the main source of foreign currency for corporates.
The details show that a list of the 2 037 beneficiaries from the main auction platform managed to access US$1,6 billion with a total 5 288 beneficiaries for the SMEs platform accessing US$326 million.
“From the inception of the Auction System on 23 June 2020 to the end of December 2021, an amount of US$2,5 billion was allotted to the key sectors of the economy with US$2 238 180 267 being allotted through the Main Auction and US$358 200 546 through the SMEs Auction,” RBZ governor John Mangudya said.
About 62% of the funds allotted in 2021 went towards payment for raw materials, machinery and equipment while 38% of the total allotments went towards payment for consumables, pharmaceuticals and other needs of the economy.
Total foreign exchange payments by source amounting to US$6,7 billion broken down as follows: Foreign currency accounts US$4,4 billion, the Auction System US$1,9 billion and the interbank market US$309 million reveals that the platform has become the main source of foreign currency.
Top ten beneficiaries during the reviewed period included Varun Beverages who received US$19 million, Blue Ribbon Foods Limited US$18 million, United Refineries US$17,5 million, Dairibord Zimbabwe US$14,1 million and Cangrow Trading US$ 13,6 million.
The other five beneficiaries included Willowton Group Zimbabwe, Treger Products, Olivine Industries, Surface Wilmar (PVT) LTD and Sable Chemical Industries Limited.
More companies drawn from diverse economic backgrounds to include mining, technology and services sectors also derived foreign currency from the market.
Economist Persistence Gwanyanya described the allotments as a clear testimony that the central bank is the main source of foreign currency which has delivered tangible results when compared to the alternative market.
“There is therefore a need to appreciate the parallel market as a source for small trades hence going forward business players must rate the impact of the two markets on the basis of tangible results. Most of the imports received throughout the year were funded through the auction. There is still a need to continue containing the volatility in the parallel market in order to avoid distorted price discovery mechanisms which do not truly reflect the economic fundamentals,” he said.