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Mr Jabangwe

Business Reporter
Some errant banks could be diverting to other uses, foreign currency allocated to companies by the Reserve Bank of Zimbabwe (RBZ) towards procurement of critical imports, Confederation of Zimbabwe Industries (CZI) revealed yesterday.

The foreign currency diversion, the industrial lobby group said, could be partly responsible for the ballooning external payments backlog.

CZI said it had since implored the central bank to increase its monitoring mechanisms around the disbursement of foreign currency allocated to industry for critical inputs to avoid artificially worsening an already dire situation.

This comes as CZI said it was targeting the central bank’s $600 million nostro stabilisation facility from Afreximbank that would be in place by end of September this year, “otherwise companies will be in pain”. In its last official update, the RBZ said the external foreign payments backlog stood at $180 million.

CZI president Mr Sifelani Jabangwe, said it emerged during meetings with the RBZ to discuss the situation facing the manufacturing industry, amid the choking foreign currency shortage, that some firms that procure certain critical medical supplies did not receive money allocated to them.

“We have identified that in the current system there is a problem with the allocation of money. We have had meetings with the Governor and one company said to have been allocated money by the RBZ for critical requirements, did not receive the allocated funds. So there is a problem in the system. They were allocated (money), but it did not get to them. Maybe it was converted by the bank or someone in the bank, so, we believe this is one company, but this might be happening to other companies,” he said.

“This company said ‘we have not received our allocations in the last three months, but the RBZ said ‘we have been allocating you money every month’ because the RBZ was monitoring them heavily, they supply essential material into the medical field. (The allocations) were significant, they run into millions. “Probably, most of the companies that are crying (over foreign currency) were given allocations (by RBZ) but the allocations did not get to them,” he said.

CZI said increased monitoring of disbursement of hard currency by banks after allocations by the RBZ was one way to manage shortage of foreign currency.

Industry anticipates the shortage of foreign currency, especially needed for critical foreign payments, to get worse around September when inflows from Zimbabwe’s biggest single export earner, tobacco, dry up after the selling season ended.

CZI also said there is need for Government to increase support to the production of cotton, even as the bulk of the crop is exported in its raw form, to ensure that export earnings from white gold help ameliorate the dire foreign currency situation facing Zimbabwe.

He said the crop could bring around $200 million. Tobacco exports start trickling around February while inflows from cotton stretch beyond September. Mr Jabangwe also said Government needed to increase the number of products whose importation is regulated given the benefits realised after introduction of Statutory Instrument 64 that resulted in reduction of the country’s annual import bill by $1 billion.

In February this year, the RBZ rapped banks for not strictly adhering to the import priority list in allocating foreign currency, describing their conduct as “indiscipline” and a “failure” of the market to make positive impact on the economy.