Forex auction allots US$107 million

The Reserve Bank of Zimbabwe (RBZ) says a total of US$107,8 million was allocated to companies under the foreign exchange auction system in April.

The auction system was established in 2020 to help firms access cheaper foreign currency after rates ran amok on the black market, threatening economic growth.

The RBZ says the auction system has helped Zimbabwe avoid an industrial crisis, but recently, business leaders said the platform had failed to provide enough liquidity to help firms import raw materials.

In a statement, central bank governor John Mangudya said 749 applicants benefited from the platform in April.

Reserve Bank of Zimbabwe governor John Mangudya
He said 2 142 beneficiaries were allotted US$17,8 million in the small to medium scale enterprises sector during the period.

A few months after it was established, Zimbabwe’s biggest companies hailed the foreign currency auction system for defusing a foreign currency crisis that had affected production.

The Confederation of Zimbabwe Industries said then the auction system had also helped manufacturers.

But in the past year, reports emerged that the RBZ was failing to release allotted funds, and firms were struggling to find foreign currency.

At one point in 2021, firms were owed about US$200 million, but the RBZ has undertaken to address the problem.

Commenting on recent economic developments CZI president Kurai Matsheza said the crisis had in part been caused by the auction system, and the country has had to resort to imports.

“We import crude oil from Brazil, so we need foreign currency, but the auction has been failing to give manufactures sufficient US dollars to be able to import. On the issue of mealie-meal shortage, it has something to do with the fact that the government stopped millers from buying except the Grain Marketing Board, which created bottlenecks on the supply chain. It depends on how the government will act. The policies put in place will determine whether the situation gets back to normal or not,” Matsheza said recently.-newsday