New policy to kill forex black market

Anthony Mandiwanza - Dairyboard

INDUSTRIALISTS and market watchers have hailed the monetary policy statement presented yesterday by Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya, saying it will kill the foreign currency parallel market and help increase production.

They described the monetary policy statement as “an excellent” intervention.

Dr Mangudya announced a raft of measures designed to preserve the purchasing power of RTGS money and to restore export competitiveness within the economy.

The measures include the establishment of an inter-bank foreign exchange market; putting in place local nostro foreign currency accounts settlement platform; implementing a monetary targeting framework and ensuring the stability and resilience of the financial system through a macro-prudential framework, among others.

Industrialists and economic commentators have been lobbying for such measures for a long time, principally to ease foreign currency shortages, which were now manifesting themselves in high prices of basic goods.

Critically, the introduction of an inter-bank foreign exchange market unshackles manufacturers, particularly those not on the priority list, to source foreign currency on the formal market and avoid being jailed for 10 years for illegal dealing in forex.

In September 2017, Government gazetted Exchange Control Regulations empowering the police to arrest anyone trading in currency without a licence and allow for seizure of such cash.

Fines not exceeding the value of the currency and sentences not exceeding 10 years are some of the penalties.

Dairibord Zimbabwe Limited CEO Mr Antony Mandiwanza told The Herald yesterday that the pronouncements by the central bank chief were “positive”.

“From an industry perspective, what I am looking at is that if I am going to access my foreign currency to support production that will have a positive effect of increasing production,” he said.

“Secondly, the cost of imports will come down, which means that the cost of goods and services on the consumer will also come down, therefore, we will focus on volumes instead of focusing on price increases.”

Mr Mandiwanza said measures on forex retention by exporters were also encouraging.

“I think you look at it from two angles, there are some exporters who were earning 100 percent, but their retention is now reduced to 80 percent,” he said.

“Prima facie, you think it’s a reduction, but that reduction is compensated by forward value in the balance of the 20 percent. So, the net effect I think is still positive.”