Foreign Exchange Auction System given thumbs up

By Owen Mandovha

THE efficiency of the foreign currency auction system came under scritiny this Monday when the Zimbabwe National Chamber of Commerce (ZNCC) and the Reserve Bank of Zimbabwe (RBZ) appeared before Parliament’s Budget and Finance Committee.

President of the Zimbabwe National Chamber of Commerce Mr Mike Kamungeremu noted that the foreign currency auction system should continue to play its role of availing foreign currency based on the fact that industry and the economy cannot sustain a fully dollarised economy.

However, he noted that monetary authorities need to improve efficiency in terms of clearing the backlog and use market determined rates.

“This economy cannot sustain a fully dollarised economy as we speak because we do not have enough foreign currency to sustain that. We do appreciate that the auction has been vital in breathing life back to industry, but it is concerning that some of our members have not been able to access the forex on time which has largely affected their businesses so we call for the speedy resolution of some of these challenges especially the issue of backlog,” he said.

The Reserve Bank of Zimbabwe Governor, Dr John Mangudya said the auction system has played its role since inception with more than US$3.3 billion having been disbursed so far.

The auction system came at a time when there was almost no hope for industry to rescue it from forex shortages and we have witnessed more companies coming on board to bid for forex resulting in the resuscitation of some of these companies,” he said.

The Reserve Bank of Zimbabwe made a key intervention by establishing the auction system in June 2020 and two years down the line manufacturing capacity has increased, including availability of locally-manufactured products.