Call to revamp auction system
THE Reserve Bank of Zimbabwe (RBZ) has been urged to narrow the gap between the small to medium enterprises auction and the main auction as it is felt that the vast majority of SMEs that have upscaled operations are struggling to benefit.
SMEs that have gradually migrated a notch higher but do not qualify to participate in the main auction system, are caught in-between.
Mr Moses Mashavave
These SMEs are therefore appealing to the RBZ to devise mechanisms to cater for them as they are technically not benefiting from both auctions.
The auction system resumed trading last week following the closure for the festive holidays.
Mr Moses Mashavave who is one of those that have benefitted from the auction floor, said this year, the central bank should also focus on ensuring that all businesses regardless of their size benefit.
“We need the central bank to work to narrow the gap between the SMEs auction and the main auction. A company which has been receiving support from RBZ for a year has obvioulsy grown but probably is not big enough to qualify for the main auction,” Mr Mashavave said.
He said there is therefore a need for RBZ to come up with a mechanism which ensures all companies benefit from the auction system regardless of their size.
In an update last week, RBZ said US$24,3 million was allotted to 132 beneficiaries under the main auction and US$2,7 million to 207 beneficiaries under the SMEs auction during the month of December 2022.
Since its inception in June 2020, US$3,7 billion has been allotted through the auction system to both the main and the SMEs auction.
Business analyst Mr Morris Mpala said as the auction system commences its new business year, it will be prudent for it to disburse funds timeously.
He said this would safeguard the market from speculators and arbitrage tendencies.
“Let the auction market float so that there is price discovery and we avoid creating arbitrage for parallel market activities” he said.
Meanwhile, the Confederation of Zimbabwe Industries (CZI) is lobbying the Government to transform the willing-buyer-willing-seller market into a market-determined exchange rate to promote an enabling environment for businesses.
The largest industry lobby body is of the view that if the financial platform is adequately fine-tuned, it has the potential to curtail the parallel market distortions through a market-determined exchange rate.-chronicle.co.zw
