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Economists say the Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) is forcing businesses to enforce “price controls” which is in turn fuelling US dollar inflation.
This comes as the Government has been battling exchange rate volatility and a sharp rise in the prices of goods and services in the past months.
In its latest report, the Confederation of Zimbabwe Industries (CZI) said the enforcement of price controls by FIU is inflationary. Reads the report:
<blockquote>
The FIU has been harshly enforcing compliance with the prescribed principle of “formal exchange rate plus a 10% margin”.
The enforcement of price controls through the exchange rate by the FIU is actually also inflationary as it causes an increase in United States dollar prices at a time when the American dollar has a higher weight in the blending.
In short, the United States dollar inflation is a compliance-driven inflation as formal businesses tried to hedge against an unrealistic official exchange rate that they were being forced to use.
</blockquote>
Economist Gift Mugano told <a href="https://businesstimes.co.zw/fiu-hounds-firms/">Business Times</a> that if the FIU enforces price controls, it will destroy businesses. He said:
<blockquote>
The local firms peg their prices at the prevailing parallel market rate causing the Zimbabwe dollar to be on the high side as the businesses forward price to survive.
If the FIU comes to enforce the indexation of the United States dollar companies would struggle.
</blockquote>
However, Finance and Economic Development Deputy Minister Clemence Chiduwa said businesses should comply or perish. He said:
<blockquote>
Those who continue to index their prices using the parallel market rates will put themselves out of business as consumers have choices so the United States dollar inflation is for the short term and what is critical is for business to adjust.
The reality is that stability is going to be sustained, we are not going to let go and stability is not transitory. It’s now time for business to start to be ethical.
They can hold on to their current position and see what is going to happen. It is going to be sustainable. They are allowed to take their position but they will lose out in US$ terms as the local currency appreciates.
</blockquote>
CZI chief economist Cornelius Dube told Business Times that the Zimbabwe dollar pricing is correlated with the movement of the parallel exchange rate hence the prices will follow that pattern.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Pindula News

"Price Controls" Driving US Dollar Inflation - Economists

Captains of industry say the deteriorating economic situation and the rapid depreciation of the Zimbabwe dollar is attributable to the creation of “hot money”.
“Hot money” is a form of short-term investing in which investors move their money between financial markets to take advantage of interest rate fluctuations. It is “hot” because it tends not to stay in one market very long.
Market analysts are of the view that large payments to public contractors and suppliers to the Government are some of the sources of the excess liquidity that is shaking the Zimbabwe dollar.
The local currency has fallen to $1 888/US$1 on the official interbank market and more than $3000/US$1 on the parallel market.
Kurai Matsheza, who is the president of Zimbabwe’s largest industrial lobby group, the Confederation of Zimbabwe Industries (CZI), believes that “hot money” is being created in the economy. He was recently quoted by <a href="https://www.businessweekly.co.zw/someone-is-creating-hot-money-industry/">Business Weekly</a> as saying:
<blockquote>
Our suspicion is that it (volatility) can only come from one source; there is (too much Zimbabwe dollar) money chasing the US dollar. As businesses, we do not create money.
So, who is creating this money? We do not know, but we are engaging the authorities to say guys, let’s identify the cause.
But it can only be one way; people have money that is creating this run on the exchange rate.
Some projections are saying we are going to hit US$13 billion this year. So, on the (forex) generation side, there seems not to be a problem.
So, somebody is creating money that is chasing the US dollars.
We are creating hot money nobody wants to hold that Zimbabwe dollar (for long).
As soon as someone gets the (Zimbabwe dollar) money, they want to (quickly) pass it on.
</blockquote>
However, the Ministry of Finance and Economic Development insists it has not printed money since 2017. Said Treasury Secretary George Guvamatanga:
<blockquote>
I will categorically state that since I came into this office, I have never printed money.
Since I came into this office, I have never borrowed even a dollar from the Reserve Bank.
Despite the fact that within the Finance Act, we put a provision that (Treasury) can borrow up to 5 percent of my total budget, but I had an opportunity last year to borrow.
I was in a tight situation and needed temporary accommodation for 24 hours from the Reserve Bank.
My team here refused me to borrow, and that’s how disciplined we have been, so when I pay contractors, that is why we monitor M3 and Reserve Money…, there is no money printing.
What simply happens is that what increases is the velocity of money. The velocity when I have the money here at Treasury, and the velocity when in your account… it is different.
</blockquote>
The velocity of money is a measurement of the rate at which money is exchanged in an economy.
It is the number of times that money moves from one entity to another, or how much a unit of currency is used in a given period of time. Added Guvamatanga:
<blockquote>
As long as I pay from revenue generated from taxes and I am not borrowing from the Reserve Bank of Zimbabwe that should never be an issue at all, because that does not increase the money supply.
</blockquote>
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

Currency Volatility Attributable To Creation Of "Hot Money" - Captains Of Industry

The Confederation of Zimbabwe Industries (CZI) has proposed a temporary restriction on what shoppers can buy in formal shops which are struggling to restock fast enough due to panic buying.
Formal retailers, which sell products in Zimbabwe dollars, are struggling to restock their shelves as manufacturers demand US dollar cash payments.
As a result, CZI has proposed that cooking oil purchases should be limited to two bottles per customer, and there must be a cap on the imports of basic grocery items.
Formal businesses are forced to use the official rate, which overvalues the Zimbabwe dollar, and as a result, they are losing out to informal traders, who use sell in foreign currency.
In its proposals to the Government this week, CZI said:
<blockquote>
Limit importation of basic commodities to households on for domestic use (prescribed monthly quantities)…
The informal sector sells products mainly in the US dollar, and some of the shops are totally rejecting the local currency.
They buy commodities from manufacturers at the official rate and sell very cheaply in USD.
Shrinking formal consumers are making a run-on stock (priced in Zimbabwe dollars) in formal shops, taking advantage of the exchange rate disparities and formal shops are failing to restock.
Manufacturers are demanding cash upfront which also affects restocking.
</blockquote>
The Government recently suspended duty on basic grocery items saying this was necessary to counter price increases.
However, critics argue the measure will only hurt the local industry and drain the economy of foreign currency.
CZI said, instead, the Government should produce subsidised goods through Silo Foods, the manufacturing arm of the Grain Marketing Board as well as provide food stamps to vulnerable households.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Manufacturers Propose Temporary Restriction On What Shoppers Can Buy

Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza says another electricity tariff increase could trigger a rise in prices.
This comes as manufacturers, who were seeking the Government’s intervention on umbrella US$ billing, were told to embrace it and expect a cost-reflective tariff by the Minister of Energy and Power Development, Zhemu Soda.
Speaking to <a href="https://businesstimes.co.zw/more-pain-for-zim-industry/">Business Times</a>, Matsheza said the development will trigger price increases, as the businesses will pass on the cost to consumers to survive. He said:
<blockquote>
We engaged the Energy and Power Development minister [Soda Zhemu] over the blanket US$ billing and his response was the billing was justified and the current power tariff was not cost-reflective despite an increase to around US$0.12 per kWh from US$0.09/ kWh.
</blockquote>
Last month, captains of industry and ZESA held a meeting on power billing in USD but the meeting proved fruitless after the power utility rejected local companies’ proposals.
Manufacturers wanted the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a unit of ZESA Holdings, to have the US$ bills to be matched to the proportion of forex sales but the power utility rejected the proposal and insisted on a blanket bill.
Matsheza said the tariff for exporters was way above the regional average of US11.7c/ kWh. He said:
<blockquote>
ZETDC told us the billing in US$ for exporting companies and those who are generating US$ through local sales should pay 100% in forex.
We raised an issue to say these blanket groupings may not be ideal. Whilst we understand the need to raise US$, why didn’t they look at the individual customer and say to what extent do you generate US$ sales and bill accordingly?
</blockquote>
Captains of industry are arguing that if one is an exporter and exports at an extent of 50% that is what must be billed.
However, according to CZI, Zhemu said the sub-economic tariff had left ZESA in a crisis.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Electricity Tariff Increase Could Trigger Price Hikes - CZI

The Confederation of Zimbabwe Industries (CZI) wants ZESA Holdings’ US dollar electricity billing to be matched to the proportion of foreign currency sales because businesses have different mixes of local currency and forex earnings.
The Herald reported that the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a subsidiary of ZESA Holdings, announced a new US dollar power tariff of US12.21c/kWh for all exporters.
ZETDC will charge US10.63c/kWh for other foreign currency earners.
Previously, most customers paid in Zimbabwe dollars, under a stepped billing system which entailed that users paid tariffs in line with the amount of electricity used.
Only a few exporters/partial exporters, including miners, paid for electricity in forex.
CZI says ZETDC’s tariff for exporters was way above the regional average of US11.7c/kWh, as per data from the Southern African Power Pool (SAPP).
It also said companies were being levied different power tariffs for different times of off-peak consumption, which resulted in an effective tariff rate of US13,4c/kWh. CZI said:
<blockquote>
Additionally, the computation of the MD (Maximum Demand) charge of US$5.71 per unit kilowatt, which most industrial users incur adds to the cost of production.
</blockquote>
According to CZI, ZETDC indicated that the new tariff regime would be backdated to 1 October 2022 for Maximum Demand (MD) customers and 14 October 2022 for the rest of the consumers.
For CZI, 100 per cent USD billing is unfair for businesses that were non-exporters as ZETDC does not consider foreign currency sales and export levels, among other considerations. It said:
<blockquote>
It is key that ZETDC bills be matched to local versus forex sales rations as the Zimbabwean dollar is legal tender and refusing to accept it from customers is illegal under SI 127 and other regulations.
Similarly, the auction rate should be used as the reference point in terms of conversion to local currency in bill payment as is the case with product pricing.
</blockquote>
CZI argued that the settlement of electricity bills in foreign currency should take into account foreign currency retention levels for exporters and local deposits. It said:
<blockquote>
Currently, consumers must find supplementary foreign currency to settle bills in foreign currency.
The current level of retained forex is acting as indirect taxes on businesses due to the misalignment between the formal and the widely quoted market exchange rates used to source supplies.
</blockquote>
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

Industry Says USD Electricity Billing Should Be Matched To Forex Earnings

The Confederation of Zimbabwe Industries (CZI) says it is engaging the Government to find solutions to the current electricity crisis which threatens industrial productivity.
Domestic and industrial consumers are now going for long hours without electricity outside the normal load-shedding periods.
Last week, the Zambezi River Authority (ZRA), which manages the Kariba Dam on behalf of Zimbabwe and Zambia, ordered the Zimbabwe Power Company (ZPC), a subsidiary of ZESA Holdings, from generating electricity at Kariba Dam until at least January next year due to low water levels.
CZI president Kurai Matsheza said local industry was caught “flat-footed,” by the move by ZRA to order the cessation of power generation at Kariba South Power Station. He said:
<blockquote>
It’s a situation we are engaging the authorities on, just to find a common way of coming out of this situation, but unfortunately, there are no quick answers, so we just have to keep negotiating.
We also encourage the Government to speed up whatever accommodation we can have with the Zambian authorities, for example, to be allowed to use their portion of the water in the Zambezi to continue running on our side, or alternatively, they can sell to us the electricity they would have generated.
</blockquote>
The Minister of Energy and Power Development, Zhemu Soda, is expected to give a detailed statement on the issue of Zimbabwe’s energy and power supply soon, a Cabinet spokesperson said on Tuesday.
Meanwhile, a new unit at the Hwange Power Station was successfully turned on for the first time last week, raising hopes that the power challenges will soon be alleviated.
The unit is expected to start supplying 300 megawatts to the national grid before the end of this year. | <a href="https://newziana.co.zw/2022/11/30/local-industry-engaging-govt-on-power-challenges/">New Ziana</a>

Captains Of Industry Engaging Govt On Power Challenges

The Confederation of Zimbabwe Industries (CZI) has welcomed the decline in monthly inflation alongside the stabilisation of the foreign currency exchange rate on the parallel market.
The monthly inflation rate in August 2022 dropped to 6.6% from the July 2022 rate of 16.1% while the exchange rate has hovered between ZWL$700 to ZWL$800 against US$1 on the parallel market over the past few weeks.
This has been attributed to interventions by monetary authorities that include the introduction of gold coins and the move by the government to stop payments to its suppliers.
Speaking exclusively to <a href="https://www.newzimbabwe.com/czi-hails-inflation-decline-zim-recovery/">NewZimbabwe.com</a>, CZI president Kurai Matsheza said that the developments will go a long way in providing a strong basis for business growth. He said:
<blockquote>
These trends seen in isolation are quite good. Indeed, nobody enjoys seeing inflation galloping and exchange rates going haywire. It is indeed a very welcome development.
</blockquote>
Matsheza, however, lamented the shortages of the Zimbabwe dollar in the economy saying this has resulted in depressed demand for goods. He said:
<blockquote>
So the downward side which must also be considered are the critical shortages of the Zim$ in the market.
We have seen local currency sales going down for reasons we believe to be prompted by the rush to purchase gold coins and the move by the government to stop payments to its suppliers.
</blockquote>
Meanwhile, former Finance Minister Tendai Biti has challenged the government to find a lasting solution to current economic challenges instead resorting to what he considers unsustainable short-term measures.
He said the “stability” will soon be a thing of the past as the government will need to pay civil servants and fund command agriculture and election promises which will result in an increased broad money supply and trigger exchange rate volatility.

Confederation of Zimbabwe Industries Welcomes Inflation Decline, Zim Dollar Recovery

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:
<blockquote>
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.
</blockquote>
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:
<blockquote>
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.
</blockquote>
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.
<h4>More: <a href="https://businesstimes.co.zw/forex-backlog-widens/">Business Times</a></h4>

Forex Auction Allotment Backlog Widens

Industrialists say rising fuel prices push up the cost of production and this will result in a sharp increase in the prices of goods and services.
Early this week, the Zimbabwe Energy Regulatory Authority (ZERA) increased the price of petrol to US$1.73 per litre from US$1.68 while the retail price of diesel also went up to US$1.76 from US$1.74 a litre.
Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza, told Business Times that rising fuel costs threaten the survival of the manufacturing sector. Said Matsheza:
<blockquote>
As industry, we cannot absorb these cost increases but we can pass them on to customers and the net effect of that is that production is going to come down because there is no way businesses are going to continue producing the same products at the same volumes with these cost increases.
With the new development in the economy the cost of production for all goods is going to go up, leaving the manufacturing sector exposed to these challenges that threaten the survival of the sector.
Unfortunately, this is the difficult operating environment the economy is living in daily.
</blockquote>
<h4>More: <a href="https://businesstimes.co.zw/fuel-charges-to-push-prices-of-goods-up/">Business Times</a></h4>

Rising Fuel Charges To Push Prices Of Goods Up

Some locally-manufactured basic commodities are running out at retail shops raising fears of a repeat of the 2008 scenario when supermarket shelves were virtually empty.
Some supermarkets are reportedly limiting the number of commodities such as cooking oil per customer to prevent hoarding which would result in an artificial shortage of the product.
On 7 May 2022, President Emmerson Mnangagwa ordered banks to suspend lending to corporates and individuals, including the manufacturing sector.
The move is believed to have triggered the current shortages of cooking oil and mealie meal, among other basic commodities.
Speaking in an interview with NewsDay, Consumer Council of Zimbabwe (CCZ) executive director Rosemary Mpofu said they were monitoring the situation. Said Mpofu:
<blockquote>
We are in constant engagement with the suppliers of goods to check what could be the cause of those shortages.
We are conducting a survey to come up with a true picture of the situation throughout the country.
It could just be an issue synonymous with some particular shops which could be different from the situation obtaining countrywide.
Our Monday (today) survey outcome will then explain the issues at hand.
</blockquote>
Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza said that the failure of the Reserve Bank of Zimbabwe’s foreign currency auction system resulted in the industry failing to access US dollars to buy critical raw materials. Said Matsheza:
<blockquote>
We import crude oil from Brazil, so we need foreign currency, but the auction has been failing to give manufacturers sufficient US dollars to be able to import.
On the issue of mealie-meal shortage, it has something to do with the fact that the government stopped millers from buying except the Grain Marketing Board (GMB), which created bottlenecks in the supply chain.
It depends on how the government will act. The policies put in place will determine whether the situation gets back to normal or not.
</blockquote>
<h4>More: <a href="https://www.newsday.co.zw/2022/05/panic-as-basics-run-out/">NewsDay</a></h4>

Some Basic Grocery Items Running Out

Officials from the Confederation of Zimbabwe Industries (CZI) met the Reserve Bank of Zimbabwe (RBZ) Governor, John Mangudya early this week to discuss a number of issues.
The meeting came after a CZI position paper, titled “CZI Urgent Engagement paper on the deteriorating currency situation” was leaked to the public. In a statement on Tuesday, 26 April, CZI president Kurai Matsheza, said:
<blockquote>
Further to the unintended circulation of the Confederation of Zimbabwe Industries (CZI) paper, meant for dialogue with the authorities, we would like to clarify matters and update our members and the public.
We have subsequently met with the Reserve Bank of Zimbabwe (RBZ) Governor, Dr JP Mangudya and would like to highlight the outcome of our meeting.
</blockquote>
Matsheza said during the discussions, the central bank Governor gave assurances that the de-dollarisation is going to be a process and that no rushed return to an exclusively Zimbabwe Dollar or USD environment is planned.
Mangudya also assured the captains of industry that there is no intention to “raid” foreign currency balances and that the auction backlog is a priority for the RBZ and concerted efforts are underway to clear the backlog. Added Matsheza:
<blockquote>
The other matters raised in the said CZI document shall form the basis of further consultations between CZI and the Authorities on a continuous basis as is our normal and usual custom.
As CZI, we remain committed to engaging with the government and collaborating in the best interests of the economy, our members and business.
</blockquote>
<h4>More: <a href="https://zero.pindula.co.zw/">Pindula News</a></h4>

No Rushed Return To A Mono-currency, Says Mangudya

The Confederation of Zimbabwe Industries (CZI) has reaffirmed its sentiments regarding what it called “the deteriorating currency situation” following condemnation by the Reserve Bank of Zimbabwe (RBZ).
On Friday, 22 April, CZI released its position paper where it urged the RBZ to suspend the foreign currency auction system and fully liberalise the foreign exchange market after the Zimdollar fell to $350 against the US dollar on the parallel market.
In his response to the CZI position paper on Saturday, 23 April, RBZ Governor John Mangudya said CZI was misinformed and the paper should be disregarded.
Mangudya insisted that the foreign currency auction system will remain in place because suspending it would cause shortages of goods on the market and abet inflation.
However, on Sunday, 24 April, CZI president Kurai Matsheza said there is a need to find common ground, otherwise, if the status quo is maintained, some companies could collapse. Said Matsheza:
<blockquote>
I think the route of discussion and engagement should be open and we all are really positive that these engagements will take us forward.
I don’t think the authorities will not listen to us. They may have a position, but I am sure that position can be debated and common ground can be found.
I am sure they will listen to what we have highlighted in that paper and they will engage.
We are not saying that they can adopt 100% of the recommendations, some of them can be picked, but I am sure that common ground can be found.
I am sure some will have difficulty continuing operating, it is going to be difficult.
But, look, the situation has been difficult for the Zimbabwean operating environment and I am sure some may actually find it difficult to continue.
</blockquote>
Here are the CZI’s recommendations outlined in its position paper released on Friday that seemingly angered Mangudya:
<ol>
<li>The auction should be suspended until the backlog is cleared and published as such</li>
<li>The Auction requires independent supervision along with the RBZ. This can include a Chartered Accountancy Firm and a professional registered auctioneer. This serves to address the rapid trust injection required to stabilize the Z$</li>
<li>Allow the currency auction to perform a price discovery role for the efficient allocation of foreign currency. This implies true Dutch Auction Principals as originally envisaged are implemented. The highest bids get full allocation within the regulated limits. This will curb abuse of the auction by unscrupulous players in the market, as well as eliminate the premiums and discounts being applied on the official rate. It would further increase flows of foreign currency into the formal system through the participation of willing sellers.</li>
<li>Auction what is adjudged independently to be available.</li>
<li>Foreign currency retentions must be financed through the budget.</li>
<li>Banks must encourage exporters to freely set reserve prices and sell their foreign currency on the auction system.</li>
<li>Policy must do away with the priority list and liberalise the market.</li>
<li>High level multi-sectoral meeting that must find a solution for agricultural financing. Banks CEO’s, RBZ, Ministry of Agriculture and Ministry of Finance must be closed in a room in Vic Falls until they find a solution that removes the burden of funding agriculture on printing money.</li>
<li>Tight control of money supply through holding constant the stock of money circulating in the economy and implementing reserve and broad money targeting.</li>
<li>Suspension of all quasi-fiscal activities which have an effect of increasing money supply growth and creating market distortions or arbitrage opportunities</li>
</ol>
<h4>More: <a href="https://www.newzimbabwe.com/zimdollar-crisis-czi-hits-back-at-mangundya/">NewZimbabwe.com</a></h4>

CZI Reaffirms Its Position On The Deteriorating Currency Situation

Full statement by the Confederation of Zimbabwe Industries (CZI) on measures that should be adopted to save the Zimbabwe dollar.
<h2>22 APRIL 2022</h2>
<h2>URGENT ENGAGEMENT PAPER ON THE DETERIORATING CURRENCY SITUATION</h2>
<h2>INTRODUCTION</h2>
CZI is committed to working with the Government to resolve the economic ills afflicting the nation such as inflation and economic instability.
In the past 12 months, the government has made significant progress toward managing inflation and bringing price stability from the peak period of July 2020 when annual inflation reached 838%.
The government has also made commendable progress in infrastructure investment in the last 12 months with notable funding for dam construction and road infrastructure standing out.
However, inflationary pressures and currency instability have persisted to the detriment of economic progress.
Over the years CZI’s advice has been premised on the economic principle that there is no known example in economic history that has been able to simultaneously control
<ol>
<li>Money Supply</li>
<li>Interest Rates</li>
<li>Exchange Rates</li>
</ol>
Getting the price of foreign currency right is a fundamental matter of Zimbabwe’s economic development interest.
<ul>
<li>An overvalued ZWL broadly undermines the scope for maximizing structural efficiency and the growth of both the export industry and import substitution.</li>
<li>The policy of maintaining an overvalued ZWL imposes a big tax on the export industry undermining its growth and transparency.</li>
<li>The policy also unwittingly subsidises imported industrial goods that then start competing unfairly for supermarket space with locally manufactured goods and accelerates deindustrialization.</li>
</ul>
<h2>WHERE WE ARE NOW</h2>
CZI believes what we are witnessing on the Zimbabwe Dollar (Z$) is tantamount to a bank run on the Reserve Bank of Zimbabwe (RBZ).
Mervyn King, Governor of the Bank of England famously said that it may not be rational to start a bank run, but it is rational to participate in one once it has started.
The material and all the case studies on bank runs point to aggressive actions to restore trust in the institutions affected. 
Aggressive, transparent and visible actions are the only way to save the Z$ and stop the bank run.
We are at a point where what to do is just as important as what should not be done.
Mono currency ZWL without international reserves should not be done as the economy is not ready for mono currency.
Foreign currency accounts should not be raided as has happened before with serious consequences of loss of value at all levels of business and society.
<h2>HERE IS WHAT WE BELIEVE HAS GONE WRONG</h2>
<ul>
<li>The Dutch auction was initially implemented according to the rules of the auction which rules were flouted and this is evidenced by the failure of the auction to settle bids and accumulating backlogs stretching over ten-week periods. This means the auction was auctioning money that was not there. Reports of companies having bids being prorated yet they would have submitted high-rate bids are also an indication the Dutch auction rules which state that the highest bidders get all their allotments was flouted. We published and shared a paper highlighting potential pitfalls which was a comparative analysis of auctions that have succeeded or failed, and we have gone on to do what is in the auctions that have failed</li>
<li>The result of the above is that we lost the near convergence position that the auction had achieved in the beginning and trust was also lost especially after several promises of clearing the backlog and this is to companies that still trying to find solutions to legacy debt of yesteryear.</li>
<li>The failure of the auction to stay on track prevented the expansion of the supply side where holders of foreign currency did not</li>
</ul>
It is important that a balanced approach is taken to bring back the local currency from the brink of rejection that it faces now in the face of exchange rate instability and increasing inflation.
We must also by all means avoid the rushed decision to prematurely introduce a mono currency as the consequences of such are known from the recent past.
This approach should take the local currency to the point where it is absolutely trusted by both Government and Citizens as the preferred medium of exchange ahead of any other currency and as the most credible store of value of any savings deposited in any commercial or savings bank under RBZ supervision.
We highlight the three main pillars of policy focus that are needed urgently (these are not in the form of Sls, punishments and blame allocation)
<ol>
<li>Restoring trust and credibility of the ZWL by ensuring it is the preferred medium of exchange and a credible store of value.</li>
<li>Liberalising the forex market either through immediate reform of the auction to become a true Dutch Auction System in both principle and practice or create a separate interbank market that has the latitude to discover prices or launching a ZSE forex trading counter</li>
<li>Immediately embark on the mobilisation of foreign reserves to back to back the local currency before retiring the multi-currency regime.</li>
</ol>
<h2>CHRONOLOGY OF CZI SUBMISSIONS ON CURRENCY STABILISATION</h2>
The chronology of our engagements on currency in the most recent past includes the proposals to establish the auction but to run it as a true Dutch Auction alongside papers on the precautions needed.
We attach here the paper we submitted when SI127 was promulgated and the comparative analysis of auction systems both of which highlight what has gone wrong with what was supposed to be a transitional but efficient price discovery mechanism to take us to the desired destination of a liberalised foreign exchange market.
<ol>
<li>A Comparative Analysis of Auction Systems</li>
<li>Industry Response to SI 127</li>
<li>Ideas on SDRS</li>
</ol>
<h2>CZI key recommendations to rescue the current situation</h2>
<ol>
<li>The auction should be suspended until the backlog is cleared and published as such</li>
<li>The Auction requires independent supervision along with the RBZ. This can include a Chartered Accountancy Firm and a professional registered auctioneer. This serves to address the rapid trust injection required to stabilize the Z$</li>
<li>Allow the currency auction to perform a price discovery role for the efficient allocation of foreign currency. This implies true Dutch Auction Principals as originally envisaged are implemented. The highest bids get full allocation within the regulated limits. This will curb abuse of the auction by unscrupulous players in the market, as well as eliminate the premiums and discounts being applied on the official rate. It would further increase flows of foreign currency into the formal system through the participation of willing sellers.</li>
<li>Auction what is adjudged independently to be available.</li>
<li>Foreign currency retentions must be financed through the budget.</li>
<li>Banks must encourage exporters to freely set reserve prices and sell their foreign currency on the auction system.</li>
<li>Policy must do away with the priority list and liberalise the market.</li>
<li>High level multi-sectoral meeting that must find a solution for agricultural financing. Banks CEO’s, RBZ, Ministry of Agriculture and Ministry of Finance must be closed in a room in Vic Falls until they find a solution that removes the burden of funding agriculture on printing money.</li>
<li>Tight control of money supply through holding constant the stock of money circulating in the economy and implementing reserve and broad money targeting.</li>
<li>Suspension of all quasi-fiscal activities which have an effect of increasing money supply growth and creating market distortions or arbitrage opportunities</li>
</ol>
A lasting solution to a stable exchange rate is now long overdue for a stable inflationary environment.
A gradual approach is needed to achieve an effective and efficient exchange rate market, as it is not a one size fit all.
CZI proposes a true liberalisation of the foreign exchange market where banks act as matchmakers linking buyers and sellers of foreign currency.
The central bank’s role will only be limited to using monetary policy instruments (adjustment of interest rates, reserve requirements, bank lending levels, open market operations such as treasury bills and selling or buying foreign currency on the market
<h2>Benefits of a liberal foreign exchange on economic stability</h2>
<ul>
<li>It allows for free market price discovery of the exchange rate. This establishes trust in the market and resolves resentment on foreign earnings retention levels.</li>
<li>It crowds in various holders of foreign currency such as exporters, NGOs, households, and informal sector into the formal economy. There are billions of US Dollars circulating in the informal sector.</li>
<li>The central bank will concentrate on managing inflation, bring banking sector stability and building reserves from retained foreign currency earnings. This is largely the role of the central bank in most developed or developing nations.</li>
<li>It curbs the need for the central bank to borrow externally to support the auction system. Zimbabwe’s foreign debt levels are already too high and unsustainable.</li>
<li>It allows commercial banks to earn significant commissions, thus encourage foreign exchange savings and banking of foreign exchange proceeds.</li>
<li>It guarantees price stability on the local market, provided the central bank reigns in on money supply growth and quasi fiscal operations.</li>
</ul>
CZI would like to underline their commitment to continuous, pro constructive engagement with government on all economic policy fronts in purs the country’s economic growth targets.
CZI’s position on the local currency is that we must DEFEND OUR CURRENCY in a multi-currency environment and strengthen the economic fundamentals that support any currency in use.
Such fundamentals include prudence in money supply, a market-determined or liberal foreign exchange market, foreign exchange reserves and central bank transparency, especially on debt and liabilities.
<h4>More: <a href="https://zero.pindula.co.zw/">Pindula News</a></h4>

CZI Statement On The Deteriorating Currency Situation {Full Text}

The Reserve Bank of Zimbabwe (RBZ) has failed to clear all outstanding foreign currency auction system allotments backlog going as far back as January.
According to captains of industry, the market needs US$320 million per week yet the auction is only supplying just over US$30 million per week.
This has left industry struggling to import critical raw materials. Speaking to Business Times recently, Confederation of Zimbabwe Industries president Kurai Matsheza said:
<blockquote>
The RBZ governor [John Mangudya] keeps on promising us that he will clear all outstanding allotments but he has failed to do so three times and counting. The clearance of the backlog has not happened and it will not happen.
We still have some members whose allotments in January have not been cleared with some traced to 12 weeks back.
</blockquote>
Zimbabwe National Chamber of Commerce CEO Christopher Mugaga said the Government should come up with monetary policies that are biased towards the supply side. He said:
<blockquote>
The auction system is not functioning properly as it has failed to help companies to access cheaper forex due to the late settling of allotments.
The governor gave some deadlines but without proper mechanisms that backlog will never be cleared.
We have bigger problems than we thought as the auction backlog is only a small picture of the forex backlog that the industry is facing. We require more money than the banks can give us.
They are many companies that need forex but are not able to participate in the auction system and they are part of the bigger problems that we are facing as an industry.
</blockquote>
University of Zimbabwe economics lecturer Moses Chundu said the Government should admit that the Dutch auction system has failed. He said:
<blockquote>
The system is sucking blood from the poor as it is not serving them, instead, eating into the little that they have. The authorities should agree that the system has failed.
Who is the auction system serving, in the past it used to help fuel companies?
If the auction system was effective, we were going to have a blended rate with some bit of the official rate and the parallel market rate but in this case, the parallel market rate is the one that was used.
</blockquote>
Chundu proposed that the Government should abandon the auction system fully dollarise since forex deposits are going up because of increasing diaspora remittances and export receipts.
<h4>More: <a href="https://businesstimes.co.zw/rbz-fails-to-clear-auction-backlog/">Business Times</a></h4>

RBZ Fails To Clear Auction Allotments Backlog

The Confederation of Zimbabwe Industries (CZI) has urged the Reserve Bank of Zimbabwe (RBZ) to establish an interbank trading platform for foreign currency that allows demand and supply to determine the exchange rate.
The RBZ currently is running the Dutch foreign currency auction system but confidence in the auction rate is low due to the huge parallel market premium, according to CZI.
In its latest macroeconomic briefing note to members, CZI called on monetary authorities to review the auction system. Part of the note read:
<blockquote>
History has also taught us that the exchange rate cannot be legislated into a reference rate on the market, as the market will always set its own rate.
The authorities have two choices; either let the formal market determine the exchange rate using market forces or continue with controlling the formal market while letting the parallel market set the reference rate.
The fear that allowing the auction rate to depreciate will see the parallel market depreciate in turn appears not to be based on evidence, as the market premium has been shrinking with the depreciation of the official exchange rate.
It is, therefore, important that modalities for having a market-determined exchange rate be explored and acted upon, especially the need for an interbank trading platform to emerge where demand and supply of foreign currency will determine the exchange rate, rather than the auction rate being used to dictate terms.
… The economy needs a reference rate, and this rate can only be determined by market forces rather than legislation.
</blockquote>
Last Tuesday, the RBZ set the rate at US$1:ZWL$130, against US$1:$230 on the parallel market.
<h4>More: <a href="https://www.newsday.co.zw/2022/03/czi-pushes-for-interbank-rate/">NewsDay</a></h4>

Confederation of Zimbabwe Industries Pushes For Interbank Rate

The Confederation of Zimbabwe Industries (CZI) has called on the Reserve Bank of Zimbabwe to ensure that the Dutch foreign currency auction rules are observed, which is not the case at the moment.
In a report published on Monday titled “The Currency Situation and Recommendations for Change”, CZI said the high demand for forex at the forex auction is a result of the inefficiencies or non-adherence to strict Dutch auction rules. It noted a number of red flags which are:
<blockquote>
These are showing up in the delays in settlement, price increases and increasing inflation, which would unsettle the stability that had characterised the year 2021.
The predictability of the auction rate has seen participants becoming more cunning, knowing full well that if they bid at the previous minimum acceptable rate, they will still access foreign currency.
The risk of losing out, which was the basis for getting the correct price from the auction, has now been minimised by the RBZ preference to auction foreign currency that they do not have.
The extended backlog discourages players that have a genuine need for foreign currency and cannot afford to wait for six weeks while those that are importing simply due to the existence of cheap foreign currency do not mind waiting to get their bids honoured, even though they have resources tied down during the waiting period.
Thus, the foreign currency auction is now attracting foreign currency demand that would normally not have been there, simply due to the perception that the foreign currency is cheap.
It is now profitable to import products rather than producing and sourcing locally due to the exchange rate distortions that have emerged from the auction market.
The same phenomenon is being observed at the bureaus de change with artificial demand for foreign currency both for local use (the US$50s) as well as for travel allowances (US$500) now being the norm.
</blockquote>
<h4>More: <a href="https://news.pindula.co.zw/">Pindula News</a></h4>

It's Now More Profitable To Import Than Produce - Industry

The Employers’ Confederation of Zimbabwe (Emcoz) has written to the Minister of Labour, Paul Mavima complaining about the conduct of the police and soldiers deployed to enforce the lockdown.
This comes after the security forces recently blocked workers from entering into central business districts of some towns including the capital for no clear reason thereby forcing business to close down.
The letter that was signed by Emcoz president Israel Murefu reads in part:
<blockquote>This letter serves to express our concern as business with respect to the disruption that is being caused to operations as a result of actions of security forces at roadblocks and checkpoints particularly in urban centres.
We wish to put it on record that the conduct of security forces, which prima facie, do not appear to be in accordance with known Covid-19 lockdown regulations, is causing serious disruptions to business operations.</blockquote>
Murefu added that as rightfully acknowledged by both the minister of Finance (Muthuli Ncube) and Reserve Bank of Zimbabwe governor (John Mangudya), the country’s economy is on its knees due to low production adding that the actions of the security forces are likely to worsen the crisis.
This comes after a recent survey by the Confederation of Zimbabwe Industries observed that the Covid-19 pandemic has dealt a major blow on Zimbabwe’s productive sector with some manufacturing companies on the verge of collapse.
More: <a href="https://www.thestandard.co.zw/2020/06/21/outrage-military-police-clampdown/">The Standard</a>

Army, Police Clampdown Spark Outrage

Captains of industry have slammed the decision by the government to authorise some fuel dealers to sell fuel in foreign currency at selected fuel service stations.
Confederation of Zimbabwe Industries (CZI) immediate-past president <a href="https://www.pindula.co.zw/Sifelani_Jabangwe" rel="noopener noreferrer" target="_blank">Sifelani Jabangwe</a> said allowing some fuel dealers to sell fuel in hard currency is discriminatory. Said Jabangwe:
<blockquote>Yes, Government has allowed those with free funds to import fuel and sell it in forex, but this should be a temporary measure.
There should be no segregation in accessing fuel. Those who import using their money want to recoup their expenses and they will continue selling in hard currency.</blockquote>
Jabangwe added that the selling of fuel in foreign currency would lead to redollarisation, which Zimbabwe is not ready to adopt.
Last week Reserve Bank of Zimbabwe (RBZ) Governor <a href="https://www.pindula.co.zw/John_Mangudya" rel="noopener noreferrer" target="_blank">John Mangudya</a> said the Central Bank has given the <a href="https://www.pindula.co.zw/Zimbabwe_Energy_Regulatory_Authority" rel="noopener noreferrer" target="_blank">Zimbabwe Energy Regulatory Authority (ZERA)</a> approval to register fuel service stations with free funds for direct imports to be sold in foreign currency.
<h4>More: <a href="https://www.herald.co.zw/call-to-stabilise-fuel-supplies/" rel="noopener noreferrer" target="_blank">The Herald</a></h4>

'Authorising The Sale Of Fuel In Forex In Discriminatory'

The <a href="https://www.pindula.co.zw/Confederation_of_Zimbabwe_Industries" rel="noopener noreferrer" target="_blank">Confederation of Zimbabwe Industries (CZI),</a> has demanded that the government shows commitment to the mono-currency regime and do away with the current scenario whereby some entities are allowed to trade in foreign currency.
In its submissions ahead of the 2020 National Budget presentation set for next week, CZI warned the government that  “partial redollarisation” saps confidence in the markets. It said:
<blockquote>All government departments and agencies should demonstrate a commitment to the mono currency regime by levying all statutory obligations in ZWL.
Government is widening the deficit in accountability, confidence and trust by allowing its agencies to go into a re-dollarisation mode.
This includes RBZ, ZIMRA, ZEDTC who are honouring their obligations as well as charging some fees and taxes in US$, instead of <a href="https://www.pindula.co.zw/RTGS_Dollars" rel="noopener noreferrer" target="_blank">RTGS dollar</a>.</blockquote>
While charging for goods and services has been criminalised since the re-introduction of the Zimbabwe dollar in Jube this year, the government has allowed some businesses and entities to trade in foreign currency.
<h4>More: <a href="https://businesstimes.co.zw/business-leaders-warn-mthuli/" rel="noopener noreferrer" target="_blank">Business Times</a></h4>

Industry Warns Govt Against Partial Re-dollarisation

Zimbabwe Revenue Authority (Zimra) has said that the government’s 2% transactional tax introduced last year can be a foundation for an effective tax regime in the country.
Zimra said that the tax was introduced well in time as the majority of the people were either evading or avoiding taxes.
Addressing Parliament’s Budget and Finance Portfolio Committee on Monday, Zimra Commissioner-General Faith Mazani said:
<blockquote>The 2% tax was received negatively by the public but from our tax structure and statistics, compliance has been very low.
Very few people are paying taxes especially the registered ones. This has caused a huge fiscal deficit on the government part. We are hoping that if we can improve on our compliance, this will ease our tax structure but the government needs advice on this.</blockquote>
Her submissions, however, did not convince representatives of different sectors of the economy with Confederation of Zimbabwe Industries president, Henry Ruzvidzo arguing that the tax amounted to double taxing as those who pay the Pay As You Earn (PAYE) and other taxes also pay the 2% tax.
Zimbabwe National Chamber of Commerce chief executive officer, Chris Mugaga called for the removal of the 2% tax saying that it was increasing the cost of doing business.
More: <a href="https://www.newzimbabwe.com/zimra-defends-ncubes-2-tax/">New Zimbabwe</a>

ZIMRA Defends Mthuli Ncube's "Effective" 2% Transactional Tax

Captains of Industry have condemned the “half-hearted” approach to currency reforms by Finance and Economic Development Minister, Mthuli Ncube.
The government seems to be vacillating when it comes to reintroducing a fully-fledged local currency.
In June this year, the government made the real-time gross settlement (RTGS) and bonds notes as well as coins the sole legal tender through the statutory instrument (SI) 142 of 2019. The development put to an end the multi-currency regime that had been in place since 2009.
Confederation of Zimbabwe Industries president, Henry Ruzvidzo, asserted that monetary authorities should actively support the market. He said:
<blockquote>Prospects for the industry to year-end will depend on a number of important factors, which include foreign currency availability, electricity supply and general macro-economic stability.
The macro-environment has been highly volatile for most of the year and does not auger well for business performance.
A functional market for foreign currency requires liquidity and transparency. The continued half-hearted approach to the mono-currency system is undermining confidence in the local currency.
The active support of the market by the monetary authorities is also important for stability.</blockquote>
Meanwhile, Ncube revealed that Zimbabwe is moving towards having its fiat currency later this year. Writing in the Financial Times recently, Ncube said:
<blockquote>The Zimbabwe dollar, comprising RTGS and bond notes, is now the designated sole legal tender in Zimbabwe — pending the rollout of a fiat currency later in the year.
Initially, the government introduced it alongside the other currencies, with the intention of it becoming the main currency of exchange in place of the dollar, which would primarily be used as a reserve of value.</blockquote>
<h4>More: <a href="https://www.newsday.co.zw/2019/09/industry-raps-ncubes-half-hearted-currency-reforms/" rel="noopener noreferrer" target="_blank">NewsDay</a></h4>

Mthuli Ncube's Half-hearted Currency Reforms Bad For The Economy - Captains Of Industry

Central Bank governor chief, John Mangudya has called for unity of purpose among Zimbabweans in order to move the country forward.
Mangudya made the call on Thursday while officiating at the ongoing 2019 Confederation of Zimbabwe Industries (CZI) congress in Victoria Falls. He said:
<blockquote>I would like to state here today (yesterday) that while we have all these things in our spheres, the major missing link in this equation is unity of purpose.
You will never grow as a country (out of your problems) if there is no unity of purpose and a common approach to dealing with your problems.
We need to be perfectly united in all we do. We are faced with a situation when the world has little confidence in our way of doing things. Remember, we used to be called the breadbasket of Africa.
We can return there if we do things together and driven, like I said, by a common interest.</blockquote>
Mangudya said that he was very satisfied with the interbank market. Since February 2019, the interbank market has improved so much that $2 million is being purchased on the market compared to $500 000 in the past, Mangudya claimed.
<h4>More: <a href="https://www.newsday.co.zw/2019/07/mangudya-pleads-for-national-dialogue/" rel="noopener noreferrer" target="_blank">NewsDay</a></h4>

Mangudya Calls For National Unity

Exporters have approached the government to allow them to pay import duty in RTGS Dollars, rather than in foreign currency as is the case now.
This was revealed during an exporters’ meeting in Bulawayo last Friday, which was attended by Foreign Affairs and International Trade Minister Sibusiso Moyo.
Speaking during the meeting, Confederation of Zimbabwe Industries national deputy president Mr Joseph Gunda:
<blockquote>Government has been working very closely and in particular in supporting and creating an environment where exporters can find their time and be comfortable . . . I am aware from a Government perspective that it’s now its desire to ensure that all VAT is going to be paid in RTGS dollars.
If we then perhaps pay Zimra (Zimbabwe Revenue Authority) in foreign currency, it is not in need of the forex as compared to the importer who has to keep on generating more to then even export, that has been our idea.</blockquote>
Gunda also implored the government to allocate the foreign currency generated to productive sectors of the economy and exporting enterprises to enable them to import more raw materials.
<h4>More: <a href="https://www.sundaynews.co.zw/importers-to-pay-duty-in-rtgs/" rel="noopener noreferrer" target="_blank">Sunday News</a></h4>

'Allow Us To Pay Import Duty In RTGS Dollars' - Exporters Implore Govt

<blockquote>Statement from Sifelani Jabangwe Chairman of meeting of BMO’s and business meeting to discuss the state of the economy and interbank market held on 17 May 2019 at CZI 
Having experienced challenges of costs increases, falling demand for products due to erosion of incomes for consumers and disruptions in power, fuel and water supplies, stakeholders met to deliberate on the economic challenges. Business in Zimbabwe acknowledges there is need to accelerate engagement on the economic stabilisation and growth agenda as a collective effort across the different sectors so as to achieve effective coordination and implementation of interventions. This is from recognizing that a big part of the economic challenges are coordinative in nature. Our economy is in a position of imbalance due to distortions that need to be attended to so as to bring it back into balance with actions that will stabilise the exchange rate and also restore the purchasing power of consumers. If these distortions are not attended to they will continue to cause further distortions and damage across all sectors of the economy.
It is also acknowledged that government as a policymaker and collector of significant portion of foreign currency through surrender requirements is a key stakeholder in resolving the foreign currency issue.The Private sector also acknowledges the severity of the currency crisis that we are in as an economy and the need for urgent interventions.
It is also acknowledged that the basic economic fundamentals are positive as given by the report from the Finance Minister and also the recent IMF report. The private sector recognises that the pricing and availability of foreign currency is at the centre of our economic challenges. It is acknowledged that the economy is currently generating currency that should be enough for the economy. It is thus imperative for buyers and sellers of currency who are both from the private sector, that they should come together to find urgent interventions to stabilise the situation. A functional interbank market is central to stabilising the state of the economy.
In this respect a high level meeting of business member organizations was held at CZI on Friday 17th May 2019. Business Membership Organizations representatives from, Industry, Agriculture, Mining ,Banking and Retail were present. The purpose of the meeting was to receive a report on the interbank market from economists and to deliberate on how business can jointly and proactively work together to play their role in working to stabilize the economy instead of working in silos. The National Competitiveness Commission was also represented.
The business attendees agreed on an urgent process to be implemented collectively by business, government and labour. This process is expected to yield interventions to arrest the decline and stabilise the situation in the short term as it will involve all economic agents. The process will yield an outcome which is a model that can be used to bring back balance to pricing of various commodities as well as rewarding of labour. The model will help to identify standards of disciplined behaviour that we need to adhere to as business, labour and Government in order to achieve economic growth and stability. The model can be drawn up in a very short period of time of not more than a week of dedicated work by a competent team.
This process would then feed into the TNF process once the TNF bill has been passed into an Act so that provisions of the TNF are binding to all parties. Business thus urges restraint among economic agents as the state of the economy is being exacerbated by panic and speculation. Business is confident in the ability of local players to stabilise the situation for as long as we work together with the required urgency to bring about a home grown solution.
There will be further work to be done to include those BMOs that were unable to attend this meeting as it was called in a short space of time due to the crisis we are in.
S. JABANGWE 
CZI PRESIDENT
 
<a href="https://t792ae.c2.acecdn.net/wp-content/uploads/2019/05/CZI-Statement-Sifelani-Jabangwe-May-2019.jpg"><img alt="" class="aligncenter size-large wp-image-97354" decoding="async" height="1024" loading="lazy" sizes="(max-width: 662px) 100vw, 662px" src="https://t792ae.c2.acecdn.net/wp-content/uploads/2019/05/CZI-Statement-Sifelani-Jabangwe-May-2019-662x1024.jpg" srcset="https://news.pindula.co.zw/wp-content/uploads/2019/05/CZI-Statement-Sifelani-Jabangwe-May-2019-662x1024.jpg 662w, https://news.pindula.co.zw/wp-content/uploads/2019/05/CZI-Statement-Sifelani-Jabangwe-May-2019-194x300.jpg 194w, https://news.pindula.co.zw/wp-content/uploads/2019/05/CZI-Statement-Sifelani-Jabangwe-May-2019-768x1188.jpg 768w, https://news.pindula.co.zw/wp-content/uploads/2019/05/CZI-Statement-Sifelani-Jabangwe-May-2019-600x928.jpg 600w, https://news.pindula.co.zw/wp-content/uploads/2019/05/CZI-Statement-Sifelani-Jabangwe-May-2019.jpg 1067w" width="662"/></a></blockquote>

FULL TEXT: CZI Holds Currency & Pricing Crisis Meeting. Recommends Need For New "Model"

Manufacturing industries have urged power utility ZESA Holdings to spare them power cuts as this negatively affect their operations.
Industrialists claim that Msasa industrial area in Harare has been the most affected by the newly introduced load-shedding schedule.
In an interview with The Herald, Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe said:
<blockquote>Some areas have lost production time that is equal to two days and we are hoping that authorities will try to come up with a strategy that spares industry.
They can cut electricity elsewhere not the manufacturing sector because that will have an impact on the economy. While we are still to get a full report on the impact of power outages, Msasa has been adversely affected.</blockquote>
The Zimbabwe Electricity Transmission and Distribution Company (ZETDC) last week rolled out a stringent load shedding schedule where different parts of the country go without power for as much as 8 hours a day.
The power cuts have been attributed to dwindling water levels at Lake Kariba, which has constrained power generation as well as shortages of coal at the country’s thermal power plants.
<h4>More: <a href="https://www.chronicle.co.zw/industry-warms-up-to-zesa-tariff-increase/" rel="noopener noreferrer" target="_blank">Chronicle</a></h4>

Industry Pleads With ZESA To Be Spared Load Shedding

Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe has called for authorities to allow the interbank market to operate freely without manipulation.
The interbank market was established by the Reserve Bank of Zimbabwe following the floating of the bond note which had been set at par with US dollar.
While addressing business executives at the International Business Conference at the ZITF in Bulawayo on Wednesday, Jabangwe said:
<blockquote>Any further delays to allow markets to operate without interference will work against the good of the manufacturing sector and the economy at large.
We need to re-establish the equilibria among sectors similar to what prevailed before August 2018. Then with an effective interbank market, allow the country to grow.
… There are also concerns that the regulatory hand is determining the foreign currency exchange rate on the interbank platform, hence it’s not viewed as a rate determined by willing-buyer willing-seller trades.</blockquote>
The interbank market allows businesses to get foreign currency at a willing buyer willing seller basis.
However, the rate has continued to lag behind the parallel market and foreign currency has not been attainable for most businesses.
Related:
<ul>
<li class="entry-title"><a href="https://news.pindula.co.zw/2019/04/25/full-thread-why-the-interbank-market-is-a-missed-opportunity/" rel="noopener noreferrer" target="_blank">FULL THREAD: Why The InterBank Market is a Missed Opportunity</a></li>
</ul>
<ul>
<li class="entry-title"><a href="https://news.pindula.co.zw/2019/03/11/companies-struggling-to-buy-forex-at-official-rate-mangudya/" rel="noopener noreferrer" target="_blank">Companies Struggling To Buy Forex At Official Rate – Mangudya</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2019/04/14/new-monetary-policy-good-but-government-not-trusted-anymore-business/" rel="noopener noreferrer" target="_blank">New Monetary Policy Good, But Government Not Trusted Anymore: Business</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2019/03/14/rtgs-dollar-weakens-on-interbank-market/" rel="noopener noreferrer" target="_blank">RTGS Dollar Weakens On Interbank Market</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2019/03/28/olivine-struggling-to-access-forex-on-the-interbank-market/" rel="noopener noreferrer" target="_blank">Olivine Struggling To Access Forex On The Interbank Market</a></li>
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More: <a href="https://www.dailynews.co.zw/articles/2019/04/26/interbank-market-being-manipulated" rel="noopener noreferrer" target="_blank">Daily News</a>

Captains Of Industry Say Manipulation Of Interbank Market Should End

Industry captains have called upon the government to consider re-enact Statutory Instrument 122 of 2017 that allows companies and individuals with offshore and free funds to import specified basic commodities that are in short supply in the country.
Speaking at a Ministry of Industry and Commerce breakfasting meeting in Bulawayo last Friday, Confederation of Zimbabwe Industries (CZI) Matabeleland chapter president Joseph Gunda said:
<blockquote>To some extent, we need to liberate the economy but in an economy that is in this state, we absolutely may need some form of protection.
The reason why SI 122 was repealed was to allow those with free forex to use it to import those basic commodities that were in short supply and the intention of this was also to ensure that prices go down, but has that happened?
Our analysis proves that prices are still high, they have not gone down. We also see some of the forex being used to import products that we manufacture locally.
So we are calling as already presented to the minister that perhaps there is a need for a policy review, where the policy is deemed not to be giving the right results, particularly SI 122.</blockquote>
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<h4 class="entry-title"><a href="https://news.pindula.co.zw/2019/03/08/cheap-imports-force-79-milling-companies-to-close-in-matabeleland/">Cheap Imports Force 79 Milling Companies To Close In Matabeleland</a></h4>
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<h4>More: <a href="https://www.sundaynews.co.zw/industry-calls-for-stop-on-duty-free-imports/">Sunday News</a></h4>

Industry Calls For Re-enactment Of SI 122 Of 2017

Prices of some goods have started to go down after the Central Bank floated the bond note and allowed the market to decide what the prevailing market rate should be.
A survey carried out by the Daily News indicated that the price of 2kg rice dropped from around $7 to $6,50, a bottle of 500ml of still water is now pegged at $0,85 from $1,05, while 500ml fizzy drinks now range around $1,80 from an average of $2.
Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe said some retailers have access to foreign currency from banks. Said Jabangwe:
<blockquote>Some of them have managed to get foreign currency from banks which are going at a rate of 1:2,5 and are importing some goods.
With access to foreign currency, eventually prices are bound to go down and this will make positive contributions towards the economy.</blockquote>
Confederation of Zimbabwe Retailers president Denford Mutashu said the decrease in prices was due to a decline in consumer demand. He said:
<blockquote>Price stagnation and in some instances, decline, is due to weakening consumer demand.
In some cases, you have someone with a full tank of fuel but failing to afford the daily basics as speculation on fuel availability takes its toll on spending.</blockquote>
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<h4><a href="https://news.pindula.co.zw/2019/02/21/government-expects-prices-of-goods-to-drop/" rel="noopener" target="_blank">Government Expects Prices Of Goods To Drop</a></h4>
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<h4>More: <a href="https://www.dailynews.co.zw/articles/2019/03/07/some-consumer-prices-post-first-drop-in-months" rel="noopener" target="_blank">Daily News</a></h4>

Retailers Reduce Prices Of Some Goods

The Confederation of Zimbabwe Industries (CZI) revealed that businesses are left with less than a month’s supply of foreign-sourced raw materials. In essence, the industry will shut down in a month’s time if foreign currency shortages are not addressed urgently.
CZI president Sifelani Jabangwe told a breakfast meeting in the capital on Thursday that business has 10 ten days to make decisions. Said Jabangwe:
<blockquote>Most of our members have got a month or less of raw materials, but have no access to then buy more raw materials because there is no (forex) allocation from the RBZ [Reserve Bank of Zimbabwe] … So we have a situation where the country is grinding to a halt. We do not have more than 10 days to make decisions.
Right now, as a business, we do not have more than 10 days to make decisions because beyond that, we are going to have more businesses closing, then we will have an even bigger problem. Now, as I have said, businesses need to procure raw materials to continue doing business, which is why you have seen some businesses charging in United States dollars.
Some businesses that are open right now are likely to be closing in a month or so. What we are saying is that we either need an allocation of United States dollars now or else we should be allowed to charge in United States dollars because that is what we need for our businesses.</blockquote>
Capri Zimbabwe managing director Gary Watson said that his company has been closed since November 2018 and had to shed 400 of its workers.
<h3>More: <a href="https://www.newsday.co.zw/2019/01/one-months-raw-materials-supply-left-czi/" rel="noopener" target="_blank">Newsday</a></h3>

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