Interbank exchange platform needs fine-tuning: Exporters

The Chronicle

Oliver Kazunga, Senior Business Reporter

EXPORTING businesses have said their operations are being hampered by the ineffective interbank exchange market and speculative tendencies that promote manipulation of the foreign exchange system in the economy.

Speaking during the 2019 ZimTrade Annual Exporters’ Conference in Bulawayo yesterday, exporters said there was a need to fine tune the interbank exchange platform so that businesses obtain real value needed to grow the economy. 

“Two months ago, we had a meeting with the Minister of Finance (Professor Mthuli Ncube) and he said if the exchange rate between the US$ and local currency can be maintained at 1:12 over the next 12 months, we are able to project and plan. But there are people who are thriving by manipulating foreign exchange market rates and as long as we have such people, our exports are not going to grow,” Zimbabwe National Chamber of Commerce Matabeleland president, Mr Golden Muoni said.

“We have undisciplined people in society or businesspeople who are bent on speculation and these people are known and there are jails that are empty.

“Why do we allow people to speculate and destroy our own currency when we have jails fit for those people to go in?”

The exporters said exchange rate instability has caused severe distortions on the market resulting in price increases.

“The exchange rate is being manipulated by few individuals with speculative tendencies and its manipulation is rendering Zimbabwe’s exports uncompetitive,” said another industrialist.

Businesses said that the interbank foreign exchange market was not effective as far as availing hard cash to companies to import critical raw materials was concerned. 

“We are in the steel industry. Previously we used to get our raw materials from Zisco locally before exporting to the Sadc region, in other words we were a net exporting company. But now we import 100 percent raw materials. 

“The interbank-market exchange rate hasn’t really worked because most of the times if we try to source the money from our bankers, there is no interbank rate premised on willing buyer willing seller,” said another participant.

The business community also called on policy makers to reduce the multiple export permits in the country as this was discouraging companies from exporting. “We need to reduce the number of export permits or at least to have them decentralised instead of having people travelling to Harare to apply for permits,” said another participant.

Government recognises the role of exports towards achieving an upper-middle income economy by 2030 and has set a target of US$7 billion earnings by 2023 and US$14 billion in the next 12 years. The business leaders were speaking during a panel discussion under the topic, “Reforming the policy environment for Zimbabwe’s export growth”. — @okazunga.