Zimbabwe Central Bank shells out $2.4bn on foreign payments

HARARE – The Reserve Bank of Zimbabwe (RBZ) says total foreign exchange payments for the period January to April 2022 reached US$2,4 billion with foreign currency accounts contributing the bulk of the funds at US$1,8 billion.

Governor Dr John Mangudya in a foreign exchange payments update for the period January to April said foreign exchange auction allocation reached US$528,1 million during the first quarter with the bulk of the funds channelled towards procurement of raw materials and machinery.

The interbank market contributed US$58, 4 million during the quarter under review. According to Dr Mangudya, the bulk of the auction allotments during the month of April 2022 at 68 percent was for payment for raw materials amounting to US$55,3 million and machinery and equipment at US$30,6 million. The remaining 32 percent of the total allotments went towards payment for retail and distribution at US$10,7 million, consumables US$10,3 million, services US$9,1 million pharmaceuticals and chemicals US$5,5 million, packaging US$3,6 million and fuel, electricity and gas US$189 604.

According to Dr Mangudya, total cumulative foreign exchange auction allotments since inception of the Foreign Exchange Auction System stand at US$3,1 billion.

The governor said a list of the 749 beneficiaries of US$107, 8 million were allotted under the main foreign exchange auction during the month of April 2022 while a list of the 2 142 beneficiaries of US$17,8 million allotted under the SMEs Foreign Exchange Auction during the same month.

The RBZ foreign currency auction was temporarily closed for the festive season on December 14, 2021 and resumed on January 20, 2022 with a total US$30 million allotted on the return date.

According to the RBZ update, Blue Ribbon Foods received the biggest allotment at US$1,9 million in April followed by Windmill Private Limited and National Foods at US$1,6 million and US$1,5 million respectively.

Blue Ribbon Foods (BRI), a subsidiary of Tanzania’s Bakhresa Group, is known for its Chibataura and Ngwerewere mealie-meal brands, and Blue Ribbon flour. Bakhresa has operations in Tanzania, Burundi, Kenya, Malawi, Mozambique, Rwanda, Uganda and Seychelles.

Windmill is the largest 100 percent privately-owned fertilizer producer in Southern Africa outside South Africa with a principal market in Zimbabwe while exporting its products mainly to Zambia and Malawi, and a certain amount to Mozambique with long term plans to pursue opportunities in the Democratic Republic of Congo (DRC).

National Foods has grown to become one of the largest manufacturers and marketers of food products in Zimbabwe and the Southern African region.

The RBZ Monetary Policy Committee has in most cases urged the bank to clear the foreign exchange auction backlog and ensure that the allotted funds will be equivalent to foreign exchange available during each week of the auction.

The backlog accumulated from bids allotted on the auction but which the bank could not fund due to forex shortage, which negatively affected beneficiary entities.

But according to Dr Mangudya, there had been “a lot of progress” on efforts to clear all the allotted outstanding bids on the bank’s weekly auction system.

The backlog, he said, was also attributable to malpractices by certain entities that were sponsoring multiple bids under the auction system. – Herald