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Tuesday, May 21, 2024
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Manufacturing sector tops RBZ foreign exchange auction allotments

Story by Stanley James, Business Editor

OVER four billion United States dollars has been allotted to the productive sector since 2020, with companies channelling the bulk of the funds towards raw materials and investment in new machinery.

The introduction of the Reserve Bank of Zimbabwe Foreign Exchange Auction in 2020 has seen companies getting critical funds for retooling.

Latest statistics show that while over four billion United States dollars has been allotted to the productive sector, the manufacturing industry is the biggest beneficiary.

The trend is evidenced by the appetite for expansion, and commissioning of new machinery and industrial plants, including raw materials and machinery imports.

Zimbabwe National Chamber of Commerce (ZNCC) president Mr Mike Kamungeremu gave an insight into the huge demand for foreign exchange auction funds by the manufacturing sector.

“Naturally, the trend indicates the extent to which industries have been retooling as part of efforts to boost productivity while focusing on further growth. The fact that the economy has witnessed massive investments on new plants coupled with the increased availability of goods on the formal shelves further denotes how the auction system has fulfilled its mandate. Therefore, demand for forex by the manufacturing industries will further soar as firms continue to invest in new plants with a view of sustaining market requirements, unlocking shareholder value and focusing on the future in as far as consolidating the current gains is concerned.”

Mr Kamungeremu also outlined the importance of refining the foreign currency auction system.

“It is the issue of exchange rate stability that should be the key focus of the auction system. Therefore, as a business we anticipate further reforms or fine-tuning of the entire system because that will provide an impetus of sustainable growth as well as continuous stability which is a key cause for concern among industrialists otherwise, given the current scenario it is vital for the authorities to continue with the auction system. We shall continue to engage the relevant authorities on strategies that will create a win–win situation while focusing on more stability.”

The central bank reveals that the bulk of foreign currency allotments are from manufacturing entities, followed by the services sector, consumables, retail and distribution, pharmaceuticals and chemicals, including manufactured goods.

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