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Forex Auction Allotment Backlog Widens

1 year agoThu, 23 Jun 2022 08:06:23 GMT
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Forex Auction Allotment Backlog Widens

Industry says the foreign currency auction allotment backlog has continued to widen, a situation that has affected production.

Last month, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya told the delegates at the Chamber of Mines of Zimbabwe that the backlog was at around US$156 million and authorities were addressing the situation.

Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza told Business Times that the situation has worsened. Said Matsheza:

Our members are still battling forex backlog and the situation is worsening as the central bank takes between 10 weeks and 12 weeks to clear.

Before President’s [Emmerson Mnangagwa] pronouncements there was a serious backlog and the situation has worsened as the allotments before pronouncements have not been settled and some after the statements have not been settled also.

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Last month, President Emmerson Mnangagwa directed the RBZ to clear the backlog by the end of May.

Matsheza added that the RBZ’s failure to settle the allotments was going to negatively affect capacity utilisation. He said:

Last year the industry’s capacity utilisation was at 56.25% but with continuous failure to settle the allotments on the auction system the manufacturing sector’s capacity utilisation is certainly going to fall significantly.

The aforementioned challenges together with fuel price increases, effects of the Russia-Ukraine war and worsening operating environment as VUCA, an acronym that reflects volatility, uncertainty, complexity and ambiguity, production is going to come down as there is no way businesses are going to continue producing the same products at the same volumes with these cost increases.

The Gross Domestic Product projections are getting less and less optimistic in terms of achieving them.

Matsheza said authorities’ failure to clear the foreign currency auction allotment backlog coupled with the Government’s recent move to suspend import duty on selected basic grocery items may result in company closures and job losses.

More: Business Times

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