admin
Edgar Vhera
Agriculture Specialist Writer
THE Horticultural Development Council (HDC) has called on Government to permit exporters of horticultural products to pay utilities in local currency citing the downward review of foreign currency retention from 75 to 70 percent.
Reserve Bank of Zimbabwe governor, Dr John Mushayavanhu reviewed downwards the foreign currency retention in nostro accounts from 75 to 70 percent when he presented the 2025 monetary policy statement recently.
“In order to guarantee continued stability in the interbank foreign exchange market through augmenting the supply of foreign currency, as well as building the critical foreign currency reserves needed to anchor the local currency (ZiG), the foreign currency retention level for exporters has been reduced from 75 to 70 percent, with immediate effect.
“This implies that the effective surrender portion of export proceeds has been increased from 25 to 30 percent,” he said.
Dr Mushayavanhu said this review was consistent with the increased use of the ZiG in the economy.
“The additional five percent will ensure that exporters mobilise sufficient ZiG to meet local currency obligations and other expenses, including tax payments, going forward,” RBZ boss pointed.
HDC chief executive officer, Mrs Linda Nielsen said there was need for horticulture exporters to be allowed to pay local utility providers in ZiG for their services in alignment with the retention framework.
“The HDC reiterates its previous recommendations that local utility providers, such as Zimbabwe Electricity Supply Authority (ZESA) and local authorities, charge their services in ZiG to align with the new retention framework.
“Currently, exporters must pay many domestic obligations in foreign currency, creating an imbalance where they retain less foreign currency but still pay high foreign currency costs,” she said.
Mrs Nielsen said adjusting utility pricing to ZiG will help mitigate pressure on exporters and support the broader transition towards the use of the local currency.
The HDC urges policymakers to engage with the sector to explore solutions that balance the need for foreign currency reserves with the long-term sustainability of Zimbabwe’s horticulture industry.
Ensuring a stable and predictable policy environment is critical to maintaining Zimbabwe’s position as a key player in regional and global horticulture markets.
The HDC maintains that the horticulture industry operates within tight cost margins, with most inputs, such as power, fuel, seed, fertiliser, packaging and freight among others, denominated in foreign currency.
The reduction in forex retention percentage means exporters will have less hard currency to meet these critical expenses, placing strain on cashflow and investment in the sector.
Added Mrs Nielsen: “Producers of export-oriented crops such as peas with high production and logistics costs may be forced to scale back operations. Some farmers may switch to alternative crops and shift focus to local cash markets, which do not provide the same foreign currency inflows or long-term economic benefits as exports.”
Online Reporter