National Foods Decries Forex Shortages On Formal Market

National Foods Limited, Zimbabwe’s largest food manufacturer, has bemoaned a severe shortage of foreign currency in the official market, which is hindering business operations.

In announcing the company’s half-year results, NatFoods chairman Edwin Manikai lamented the scarcity of US dollars on the official market and called for urgent measures to promote greater acceptance of the ZiG (ZWG) within the market. Said Manikai:

The final quarter of the year under review saw currency reform measures instituted by the monetary authorities through the introduction of a new structured currency, the Zimbabwe Gold (ZWG).

Notwithstanding these progressive steps to broaden the multi-currency basket, market liquidity in the form of access to local debt facilities and foreign exchange via the WBWS platform remains severely constrained…

Whilst the Group welcomes the addition of the ZWG to the multi-currency basket, the success of this initiative will be dependent on further supportive measures, which amongst other things, will allow users to seamlessly interchange between currencies; this will naturally result in greater market acceptance, and use, of the new local currency.

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The ZiG, introduced on April 5, 2024, marks Zimbabwe’s sixth attempt to establish a viable local currency in the past 15 years. It is backed by gold, precious minerals, and foreign currency reserves held by the central bank.

Initially, it maintained a stable exchange rate of US$1: ZiG 13.86 for the first four months. However, the ZiG has since weakened on the parallel market, prompting the central bank to devalue the currency by 43% recently to address the disparity.

Industry lobby groups have cited limited access to foreign currency in the Willing Buyer, Willing Seller market as a key factor contributing to the exchange rate pressures.

More: Pindula News