‘Exchange distortions hamper trade, investment’
THERE is a need to continue fine-tuning the monetary policy following adoption of the Zimbabwean dollar while increasing dialogue between Government and the private sector towards stabilising the exchange rate, says Industry and Commerce Minister, Dr Sekai Nzenza.
As the country focuses on increasing domestic production and driving exports in accordance with the long-term strategic goal of transforming Zimbabwe into an upper-middle- income economy by 2030, currency stability is a key ingredient, she said.
While acknowledging the prevailing exchange rate distortions mainly fuelled by the speculative parallel market behaviour, the minister told delegates who attended the Business Forum on the sidelines of the 2nd Zimbabwe-Botswana Bi-National Commission in the resort town of Maun, Botswana last Thursday that Government was fully seized with the currency reform agenda.
“Government is addressing the difficult but critical issue of currency reform. Continual fine- tuning of monetary policy, close engagement between government and major private sector
players — including the banks and the ongoing steady migration towards a fully transparent interbank FX trading system will address and effectively eliminate these distortions which, regrettably, continue to complicate trade and investment flows,” said Dr Nzenza.
“Fully stabilising and consolidating the local monetary unit is a process. Challenges remain, prime among them a fluctuating exchange rate between our Zimbabwe dollar and major trading currencies such as the US$.
“Foreign currency remains in short supply within the formal market in Zimbabwe — a transitory situation, which has impacted upon the flow of timely foreign payments.”
Dr Nzenza said the prolonged use of the US dollar (2009 to February 2019) had actually “done more harm than good” to the performance of the local industry and the export sector in particular.
“It had become very difficult to export our products and services in the region and beyond as they were simply uncompetitive,” she said.
The minister said this was why Zimbabwe moved away from a multi-currency regime last year in June and embraced the local currency as the sole legal tender for domestic transactions. In its thrust to open up and facilitate investment-led economic recovery,
Dr Sekai Nzenza addresses delegates during a Business Forum organised on the sidelines of the 2nd Session of the Zimbabwe-Botswana Bi-National Commission (BNC) in the resort town of Maun, Botswana last Thursday
Government has taken significant measures to improve the doing business climate guided by the “Zimbabwe is Open for Business” mantra.
Already the new dispensation has abandoned the indigenisation policy and potential investors can now invest in Zimbabwe in any sector or sub-sector with up to 100 percent foreign ownership.
Shareholding is actually an outcome of negotiations between interested parties. As a reflection of these efforts, Zimbabwe climbed 15 places in the 2019 World Bank’s Ease of Doing Business Global Index.
In order to achieve Vision 2030, Government developed a short-term strategy, the Transitional Stabilisation Programme (TSP- 2018 to 2020).
The TSP’s main thrust is macro-economic and fiscal stabilisation, and the laying of a solid foundation for sustained economic growth and development thereafter.
The Business Forum was organised by the Botswana Investment and Trade Centre (BITC) and ZimTrade, whose collaboration has created opportunities for respective business communities to engage and discuss investment and trade.–chroncie.co.zw
