Chronicle Editor
Oliver Kazunga, Senior Business Reporter
BUSINESSES in Bulawayo have called on Government to reduce the minimum threshold for the Foreign Currency Auction Trading System, which is pegged at US$50 000, to accommodate small to medium enterprises (SMEs).
The country replaced the fixed exchange rate of US$1:ZWL$25 in June with the weekly Foreign Currency Auction Trading System to build market confidence, improve access to foreign currency and help stabilise the exchange rate.
The auction system accepts bids of a minimum of US$50 000 and a maximum of US$500 000 with individuals and firms required to make a single bid per week through an authorised dealer.
Contributing to a plenary session during a meeting with Finance and Economic Development Minister Professor Mthuli Ncube held in Bulawayo last Friday, the businesspeople highlighted the need for a reduction of the minimum threshold.
United Milling Company managing director, Mr David Muhambi, who is also the Small to Medium Millers Association of Zimbabwe chairman said:
“The issue of the auction system, I see that it doesn’t cater for SMEs who do not have that sort of funding to raise US$50 000 at a go. I think that would be a disconnect to what Government is trying to achieve — the 2030 upper middle income economy status because SMEs will be the biggest contributor to that.”
The Zimbabwe National Chamber of Commerce regional chairman for Matabeleland region Mr Godwin Muoni echoed similar sentiments and requested Prof Ncube to clarify why the country was issuing “too many” Statutory Instruments (SIs).
“My question is, are we back in multi-currency regime because it’s not clear. Right now as we are sitting, we received the S.I., which talks about dual pricing,” he said.
Last Friday, Government gazetted a law to enforce businesses to display or quote the prices of their goods in Zimbabwe dollar or foreign currency at the ruling exchange market rate determined by the auction system.
However, it has come to the attention that some uncouth elements have not complied with the directive despite moral suasion by the Reserve Bank of Zimbabwe last month.
RefAir managing director Mr Clive Oxden-Willows whose company specialises in large and small-scale refrigeration, air-conditioning supply, installation, service and repair said:
“There are a lot of smaller companies, which are the backbone of manufacturing in Bulawayo and they need foreign currency. But for them to come up with US$50 000 to bid in the forex auction trading system, it’s a bit tough. That threshold needs to be lowered.”
Responding, Prof Ncube said Government was always prepared to fine-tune policies where necessary to promote economic growth and development.
“You have raised the concern that the US$50 000 threshold for participation at the auction system is prejudicing the small players. We have noted this; these are some of the fine-tuning that need to be done for us to create a credible and accessible auction system,” he said.
Since its introduction, a total of US$71,1 million has been traded at the auction with the exchange rate moving to US$1:ZWL$72,14.
On the issue of having too many SIs, Prof Ncube said: “The issue of too many SIs, an SI is a legal instrument to support a policy; it is not a policy itself.
“So, there is nothing wrong with having the SIs, the issue is what policies are those SIs supporting.
“Don’t get caught up in these political conversations that there are too many SIs; that’s intellectually lazy, don’t be intellectually lazy.
“We are supporting a policy or policies, what are those policies that is what we should analyse.”
Prof Ncube said when a country is undergoing economic reform, a Government is bound to fine-tune the policies time and again.
Zimbabwe’s economy is emerging from the woods after close to two decades of recession due to the illegal sanctions imposed on the country by the West after Government embarked on the successful Land Reform programme in early 2000s.
The coming into power of the new political dispensation led by President Mnangagwa in November 2017, has seen the country embarking on an international community re-engagement drive with a view to improve Zimbabwe’s relations with the rest of the world.
It is against this background that the Second Republic has also adopted the “Zimbabwe is open for business” mantra with a view to unlock the much-needed foreign direct investment. — @okazunga
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