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Businesses Urge Government To Increase Forex Retention Threshold

7 months agoFri, 23 Aug 2024 08:17:31 GMT

Businesses Urge Government To Increase Forex Retention Threshold

Business leaders have appealed to the responsible authorities to reconsider the current 75% foreign exchange retention policy, arguing that the allocated funds are insufficient to meet their operational needs.

In submissions made to the Reserve Bank of Zimbabwe (RBZ) Governor, John Mushayavanhu, the Chamber of Mines of Zimbabwe (CoMZ) said the forex retention threshold policy has adversely impacted the mining industry. As a result, some companies have been forced to scale down their mining capacity. It said:

Most mining companies are facing foreign exchange shortfalls to meet their operational requirements and funding of expansion projects.

The available foreign currency has been coming down largely due to falling mineral earnings (on the back of softening commodity prices), with the mandatory 75% now being applied on a shrinking foreign exchange base.

The Zimbabwe National Chamber of Commerce (ZNCC) has voiced concerns over the serious foreign currency shortages faced by companies in the country and is calling for an increase in the forex retention threshold. The ZNCC said:

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We are engaging the central bank to increase the forex retention threshold further from the current 75% in order for our members to meet their forex requirements.
With the current system, companies are facing serious forex shortages. With most firms grappling to access forex on the willing buyer willing seller platform, the 75% forex retention threshold is affecting the companies.

Under the current policy, companies are required to sell 25% of their foreign currency earnings to the Reserve Bank of Zimbabwe (RBZ), while retaining the remaining 75%.

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12 Comments

Boozer · 7 months ago

Taura zvako Patz ndozvinofanira kuitika why Gvt ichida maRevenues in forex but forcing Zig into the market,So where exactly are we going.Tiri kuenda kuna2008 tikaita zvekutamba

Patz · 7 months ago

Zimbabwe should learn from better of countries like South Africa how they manage their currencies. Foreign tourists and business people know that when proceeding to S.A they should have Rand or find rand from banks on arrival. They cant use forex in S.A. They can possess it coz its their money but cannot use it. We should pay duty 100% in Zig for everything. Those with USD will buy the Zig from the banks. That way the gvt will have a lot of USD at the same time strengthening the Zig coz it will be on demand. The problem is that gvt like USD very much and hate it at the same time

Tabvuma👏 · 7 months ago

100% local is the way to go zveUSD hazviko

Anonymous · 7 months ago

Waakutopengawo zvako iwewe.

Patz · 7 months ago

Gvt should simply take all forex brought in by foreigners as tourists and businessmen. They should access local services using local currency which they should exchange at local banks. Gvt should stop collecting forex retention from local importers but should demand Zig as tax which the local importers should should exchange their forex at the banks. Gvt should create a conducive environment that minimises use of forex and create demand for Zig other that forcing Zig on the market.

mars · 7 months ago

you seem to be contradicting yourself with your last statement that says "Gvt should create a conducive environment that minimises use of forex and create demand for Zig other that forcing Zig on the market." Yet everything else above that seems to be forcing the zig on the market

Patz · 7 months ago

@mars Insisting on the use of our local currency is not forcing it because that is what is normal like in any other country. Creating a conducive environment for Zig to flourish is distinct from forcing use of it. Conducive environment is to put policies that allow the market forces detemine strength of Zig. Forcing Zig on the market is whereby politicians try to value Zig using force without taking into account the market force. What the gvt is doing is like telling a baker that a loaf of bread is 50c when the baker used $1 on inputs to produce a loaf. It wont work coz price determination is being done by the wrong person

mars · 7 months ago

if say the market forces are allowed to determine the value of the zig and all that you have said has been done, policies etc. Do you honestly see the zig surviving more than a year ?

mars · 7 months ago

@patz .if say the market forces are allowed to determine the value of the zig and all that you have said has been done, policies etc. Do you honestly see the zig surviving more than a year ?

Patz · 7 months ago

@Mars Zig is like a patient of life support system and the life support system being the Police and FIU and once they relax Zig would simply die

mars · 7 months ago

well you have given an answer to the current situation. My question was ,given your solution and we have a local currency being used in Zim under your system ,do you honestly think or believe that - the local currency would survive for a year as good money ?

ClD Admire kuyeri · 7 months ago

money money