Zimbabwean govt implored to deal with confidence deficit

CEO Africa Roundtable executive chairman Oswell Binha
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The GOVERNMENT should find ways to deal with the confidence deficit, which is manifesting in the domestic economy in order to eliminate factors that cause economic instability.

Despite sustained efforts by the Reserve Bank of Zimbabwe (RBZ) and the Ministry of Finance and Economic Development, there has recently been a spike in the parallel market foreign currency exchange rate in the parallel market, which is threatening to drive inflation.

Authorities have adopted a number of measures to stabilise the exchange rate including maintaining a stranglehold on money supply growth and sticking to spending within the national budget.

The concerted, at some point, resulted in the gap between the official and parallel market rates narrowing to about 20 percent.

Similarly, the annual inflation rate plunged from a post dollarisation high of 837,5 percent to two-year double digit low of around 50 percent.

Also, the central bank established the Dutch foreign exchange auction system in June 2020 to cater for domestic industry’s foreign currency requirements after many local companies had resorted to the parallel market to fulfil their foreign currency needs.

Although the central bank introduced the dutch auction system to deal with challenges of access to forex, the system has been facing a myriad of challenges, including inability to disburse adequate foreign currency to importers, which resulted in firms failing to meet their obligations.

Addressing delegates at the on-going annual convention being held in Victoria Falls , CEO Africa Roundtable chairman Oswell Binha implored the authorities to find ways to deal with the confidence deficit, which he said was manifesting in the domestic economy.

“I hope that the Government will find a rationale mechanism of providing the much-needed leadership to deal with threats of instability, the confidence and trust gap, and facilitating the creation of a one Zimbabwe team for strong national competitiveness,” said Mr Binha.

Although the auction system improved access to foreign currency exchange by industry, Mr Binha bemoaned some inefficiencies noted in the system.

Critically, a non-efficient auction system stimulates parallel market activities, setting up foreign currency exchange rates for a wild run, which propels inflation and macro-economic instability.

“As we look at our national macroeconomic framework, I acknowledge that we have issues. Topping the chart is the auction system which seems to be failing. Inflation is escalating,thereby making  foreign payments an issue.

“Economic stability should be backed by the sobriety of policies that guarantee macro-economic stability on the back of currency stability,” he added.

Addressing delegates at the event Industry and Commerce Minister Dr Sekai Nzenza said the Government was implementing initiatives anchored on the National Development Strategy 1 (NDS1) blueprint whose objective is to transform the economy through enhanced private sector led productivity.

Running under the theme “Charting the Recovery Curve, Building Momentum — Crashing Barriers, creating impact”. The convention intends to proffer several suggestions and recommendations to promote dialogue within industry and regulatory authorities.

The event was postponed last year given the effects of Covid-19 which has also seen a limited number attending this year.

The conference aims to assist CEOs and senior executives in different sectors to harness converging technologies in order to create an inclusive CEO who is prepared for the future. – Business Weekly