Industry embraces Cabinet’s forex decision

Published: 05 May 2019
INDUSTRIALISTS have embraced Cabinet's decision to craft measures that would see manufacturers being allocated foreign currency to procure key raw materials to reduce the cost of production and consequently of finished products.

This will ensure consumers benefit from lowly priced basic commodities.

Cabinet has slammed the unjustified price increases, which manufacturers claims have been necessitated by spiralling forex rates on the parallel market.

Briefing journalists after last Tuesday's Cabinet meeting, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa, said Government was perturbed by the wanton price increments, which have brought "extreme hardships" on hard-working citizens.

"To alleviate the suffering of the majority of our people, Cabinet is putting in place mechanisms to ensure foreign currency is made available to the business community for the procurement of raw materials for production process.

"This will go a long way in stabilising prices. In light of this initiative, Government is appealing to business to exercise restraint and stop the wanton increase of prices," said Minister Mutsvangwa.

Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe told The Sunday Mail Business on the sidelines of the Business Economic Empowerment Forum (BEEF) breakfast meeting in Harare last week that Cabinet's decision was timely as it would stabilise prices.

However, Mr Jabangwe said once the funds had been obtained, it was imperative that industry be consulted on how to administer them to ensure far-reaching benefits.

"The funding is actually coming to stabilise the market but we believe that we have to discuss how this funding is going to come in because the fund was previously introduced but in small quantities and at the end of the market and did not yield the expected results," said Mr Jabangwe.

"So those are the things that we are going to discuss with Government so that it (funding) is effective. We are very concerned as business because for us as business, this is the only chance we have of stabilising the economy.

"We lose money because consumers are unhappy, Government is unhappy and everyone is unhappy, and at the end of the day we lose money because of the way the rates are running high."

Mr Jabangwe added that concerted efforts to transform the economy have now become paramount, more than any other time in the past.

"We are now saying we have to do it, it's very urgent.

"We have to make it work now. That is what we are planning in this second quarter," he said.

Economist Mr Persistence Gwanyanya told The Sunday Mail Business last week that the decision by Cabinet was the "only responsible thing to do".

"Faced with sky-rocketing prices occasioned by rapid deterioration of the foreign currency situation, the only responsible thing for policymakers to do was to urgently intervene through measures to stabilise the situation," he said.

Mr Gwanyanya added that while allocation of forex was important in the short-term, it was critical for Government to implement measures that "enhance the operation of the interbank market, which is failing to attract the US$600 million circulating in the economy".

Previously, Government supported bread and cooking oil makers with forex for the importation of critical raw materials needed in the production of the products to ensure consumers got them at affordable prices.

But the coming in of the interbank forex market in February saw Government suspending provision of forex to the producers with the hope they would get it from banks and bureaux de change dotted around the country.

However, exporters are understood to be withholding forex alleging that the interbank rate was too low, at 1:3,2645 (USD to RTGS$) as at last Thursday, compared to 1:5 on the parallel market.

Mr Jabangwe said the private sector (manufacturers and/or exporters and bankers) is set to meet Government and discuss on the challenges confronting the interbank market and proffer lasting solutions that would make it work efficiently.

Finance and Economic Development Minister Professor Mthuli Ncube, recently told The Sunday Mail Business there was nothing supporting a higher rate at the moment considering that on the fiscal front, Government has been running a monthly surplus, which does contribute to money creation.

In April, Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu, proposed the idea of Government coming in to provide forex to producers of basis goods to contain price increases and improve the living standards of citizens.
- sundaymail
Tags: cabinet,


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