FUEL, cooking oil and electricity are on average chewing more than half of the $230 million allocated for imports monthly, showing very little signs of the foreign currency shortages easing anytime soon.
Appearing before the Parliamentary Portfolio Committee on Finance on Monday, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya said the country had more users of foreign currency rather than the creators of the forex required to meet the country’s imports.
“You may want to know (Parliamentary Finance committee chairperson David Chapfika) that for Zesa (electricity) we need to pay $5 million each week to import electricity from Eskom and HCB from Mozambique. For cooking oil, we need $5 million each week to import crude soya oil because we do not have our own soya oil here,” he said.
“For fuel, we spend $80 million per month for us to drive our cars so people say there is no liquidity, but the liquidity, which is there is being used in our vehicles because that is foreign currency.
He said the largest users of foreign currency did not export.
“Fuel is $80 million, cooking oil $20 million a month and $20 million is for Zesa that is $120 million only for those three products out of $230 million of exports on average a month, it means that this economy needs to export more. This is why we spend all day, not staying in the country, trying to look for foreign currency to supplement our exports so that the whole country can continue to sail through that is what we are doing Mr chairman,” he said.
Exports are the country’s main source of foreign currency. There has been a push to grow the export base, resulting in RBZ coming up with a $200 million facility to grow exports.
The Afreximbank facility resulted in the introduction of bond notes into the formal system, where exporters receive a 5% incentive.
An additional $300 million facility was introduced to grow exports.
The incentive has been doubled in other sectors, with tobacco farmers in line to get a 12,5% when the marketing season opens next week up from the 5% that prevailed last year.
In his January monetary policy statement, Mangudya said the export incentive scheme had enhanced competitiveness of the Zimbabwe’s exports contributing to the growth of exports. He said exports grew by 36% to $3,8 billion last year from $2,8 billion in 2016.
Zimbabwe is facing a foreign currency shortage that has seen companies struggling to make foreign payments to suppliers of raw materials.
This has seen companies seeking the greenback on the parallel market. The demand has seen the parallel market thriving.
Analysts say Zimbabwe is generating enough foreign currency but was being affected by the prevailing low confidence in the economy that has seen individuals and companies holding on to the dollars.
The increased demand has also seen monetary authorities coming up with an import priority list for the efficient utilisation of the foreign currency in which priority is given to importers of raw materials instead of finished products.
Foreign payments were down last year to $4,8 billion from $5,1 billion in 2016 despite growth in payments for capital and intermediate goods and a decline in payments for consumption or manufactured goods.
“This development points to efficient utilisation of foreign currency towards the productive sectors of the economy, in line with various government strategies anchored on promoting domestic production,” Mangudya said in his monetary policy statement in January.
Other than the efficient utilisation of the foreign currency, RBZ plans to grow the cake and has proposed financing bonds for tobacco and gold, two of the country’s largest foreign currency earners.