Business Reporter—

FOREIGN payments backlog has significantly increased over the past few months due to diminishing nostro account balances held by local banks, amid concerns that the situation may result in the inconsistent supplies of essential imports such as raw materials.As a result, there are growing fears that raw materials suppliers may end up stopping supplies to local firms, a development that could negatively impact on operations.

The Confederation of Zimbabwe said while the Reserve Bank of Zimbabwe was working flat out to avail forex for essential commodities, the situation was “getting worse”.

“The situation is getting worse,” CZI president Mr Busisa Moyo said in an interview.

“Even companies that fall under the priority one category 1 are finding it hard to get forex.”

To promote efficient utilisation of foreign exchange and to re-orient import demand towards productive uses, the Reserve Bank and the Business Council, represented by the Confederation of Zimbabwe Industries, the Zimbabwe National Chamber of Commerce and the Bankers Association of Zimbabwe came up with the foreign exchange priority list to guide banks in the distribution of foreign currency.

Some of the companies that fall under the priority one category include exporters, which import raw materials or machinery to aide them to produce and generate more exports, non-exporting importers of raw materials and machinery for local production (value addition) that directly substitute import of essential finished goods and importers of critical and strategic goods such as basic food stuffs and fuel.

ZNCC chief executive Mr Chris Mugaga said the situation could end up eroding the industrial capacity that had been created as a result of Statutory Instrument 64.

Mr Moyo concurred, saying while some companies have managed to boost capacity thanks to the introduction of import restrictions through Statutory Instrument 64 2016, delays in payments of raw materials may reverse the gains achieved so far. In its latest survey, the CZI said capacity utilization has grown to 48 percent largely due to import restrictions.

Some of the companies protected by the restrictions are now operating at full capacity.

“We have companies being assisted by the Statutory Instrument 64. They need raw materials to keep supplying the market but they are having problems. It is important we vigorously pursue an import management strategy and grow our exports.

“The import restrictions need to be extended. At the moment, we have a situation whereby luxury goods such as cars continue competing for limited resources with essential raw materials.”

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