- GetBucks said Zim dollar remains the thorn in the eye for business growth
- The Bank said the rapid depreciation of the local currency is offsetting profits through high expenditures
- However, the government still believes preserving the Zimbabwe dollar is the way to go
Harare- The Zimbabwe Stock Exchange (ZSE)- listed microfinance outfit, GetBucks Microfinance Bank Limited says the embattled Zimbabwe dollar remains the biggest challenge affecting business viability throughout the economy.
In a trading update for the three months to March 2023, the Bank said the continued depreciation of the local currency accelerated the operational expenditure despite measures put to stabilise it.
The Bank further highlighted pessimism in the short to medium term outlook as it anticipated continued aggressive monetary policies by the authorities to arrest rapid devaluation of the local currency.
“Despite the tight monetary policy stance, the ZWL continued to slide against the USD causing an increase of operational expenditure throughout the economy,” said the Bank.
The Bank added that, “The ZWL continues to be under pressure and this was the biggest challenge affecting business viability throughout the economy.”
During the three months to 31 March 2023, the Zimbabwe dollar depreciated by 28% on the formal market while using the parallel market rate which is determined by market forces, the currency depreciated by 56%.
GetBucks is not the only company to report regressive results due to the Zimbabwe dollar’s weakness, but it joins the queue of other companies like RioZim, Econet Wireless, CBZ Holdings and the list is endless. Truworths suspended ZWL loans while Edgars highlighted that it was focusing more on US$ credit sales than ZWL sales. CBZ Holdings recorded a 100% surge in monetary loss courtesy of exchange losses.
However, the picture shared by the government and corporates on the Zimbabwe dollar differs. The government holds the view of a vibrant, worthwhile Zimbabwe dollar, an experience denied by companies on the ground.
Delivering controversial economic measures to stabilise the economy on the 11th of May 2023, Professor Mthuli Ncube said there was no going back to using the Zimbabwe dollar. The Minister even delivered retrogressive economic measures which is a curse to the economy at a macro-economic level in a bid to save the ailing currency.
In the Banking sector, the Zimbabwe dollar has spiked interest rates of short-term loans thus, dampening demand for loans while long-term loans are completely suspended.
In the manufacturing and retail sector, the Zimbabwe dollar has trimmed profits as ZWL-denominated products become expensive as the business community is tracing the parallel market rate.
Companies, (exporters) are losing 50% of their foreign proceeds through the 25% surrender threshold to RBZ in return for the Zimbabwe dollar using the auction market rate.
This is dampening production and productivity, thus, cutting the pace of exports. Exports are key for the survival of a country as they generate foreign currency.
The Zimbabwe dollar is depreciating on a weekly basis causing the survival of companies, a threatening mission.
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