Industry backs RBZ on stability

Nelson Gahadza
Senior Business Reporter
Captains of industry and commerce say the Government’s commitment to maintain inflation, foreign exchange rate and the economic stability, is a confidence booster that will drive growth.

This follows a meeting of the Reserve Bank of Zimbabwe (RBZ) and leaders of the Zimbabwe business community on January 21, to take stock and review resolutions and commitments made at their meeting of October 11 last year.

The consultative engagement was for parties to deliberate on how to enhance price stability within the economy upon which several resolutions to stabilise the exchange rate and limit its pass-through effect on inflation were adopted.

Confederation of Zimbabwe Industries (CZI) president Mr Kurai Matsheza said if the Central Bank implements the key resolutions agreed to last week, nagging issues that include the foreign currency rate and price stability would be addressed.

“If the resolutions are implemented, they will 100 percent address issues confronting industry that are limiting the manufacturing sector’s capacity,” he said.

Mr Matsheza said exchange rate stability should be a key priority as it has, for some time now, been affecting industry and the economy at large.

RBZ Governor Dr John Mangudya said following robust and open discussions and contributions, the parties agreed that the Government and the Central Bank should come up with strategies to enhance the attractiveness of the local currency and strengthen its demand in the context of the prevailing multi-currency system.

Consequently, the RBZ will continue to refine the foreign exchange auction system and to timely fund auction allotments in line with the auction rules.

“As a way of continuing with efforts to stabilise the economy, there was a need for everyone, through a collective responsibility, to exhibit good leadership and exercise restraint on the volatility of the foreign exchange rate,” said Dr Mangudya in a statement yesterday.

Among other resolutions, the RBZ will continue fighting inflation through restrictive monetary policy and building foreign exchange reserves as a way of augmenting the defence of the value of the local currency.

Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said it was important for all stakeholders to work on confidence restoration into the economy.

He said improved circulation of the Zimbabwe dollar will be paramount to maintain exchange rate stability while efforts to reduce appetite for the US dollar should be increased.

“It takes all of us as a nation, stakeholders and Government to realise that a country without its own currency is doomed,” he said. Mr Mutashu said there was a need to eliminate the speculative nature of prices which has affected ordinary citizens.

“It is paramount that in line with efforts to reduce inflation, a lot more needs to be done,” he said.

There is also need to continue supporting productive sectors of the economy in order to increase the supply of local goods to 80 percent from the current 70 percent, said Mr Mutashu.

Dr Mangudya said some of the resolutions require relevant regulatory authorities to continue carrying out enhanced due diligence on auction participants and to monitor the use of funds obtained through the auction and come down strongly on those who submit fake documents – including invoices and bills of entry – and resort to suspension for periods not less than six months and blacklisting.

Banks, said Dr Mangudya, are encouraged and reminded not be complicit with their delinquent customers while business must ensure compliance with the provisions of Statutory Instrument 127 of 2021, now embedded in the Finance Act (Amendment Number 7 of 2021), with emphasis on avoiding abuse of auction rules and funds from auction allotments, exchange rate manipulation or currency attacks, and non-compliance with the Bank Use Promotion Act.

“The Government has to come up with appropriate incentives for exporters to improve production and productivity,” said Dr Mangudya.

The Financial Intelligence Unit (FIU) will continue penalising currency manipulators and abusers of foreign currency auction rules and breaches of the Bank Use Promotion Act.