State reneges on
incentive scheme
promises, writes
Martin Rushmere
ZIMBABWE HAS tightened up on exchange control which analysts see as further indication of the country's foreign exchange crisis.
All exporters now have to sell 40% of their foreign earnings immediately to the bank at the official exchange rate, up from 25% previously.
The immediate effect has been a sharp rise in the unofficial exchange rate - through which most trading is done - from Z$140 to the US$ to Z$175 to the US$, compared with the official rate of Z$55 to the US$. Banks expect the unofficial rate to reach 200 to one by the year end.
Said a senior official of the Confederation of Zimbabwe Industries: "The government in effect is making it harder to get foreign exchange, which is in desperately short supply. This makes it that much more difficult to keep going and exporters will be particularly hard hit." Zed Rusike, president of the Confederation of Zimbabwe Industries, said he was "disturbed and dismayed" by the requirement. "It seems the authorities are concentrating on the sharing of the dwindling foreign exchange pie instead of taking measures to increase it, which is our only real way of reviving the economy."
The central bank also said it had set up an export incentive scheme by buying hard currency from exporters at an unspecified rate for a minimum of 90 days and selling it back at a higher rate.
Rusike said the government had broken undertakings it had made during discussions over the incentive scheme. "The currency swap incentive had been viewed positively on the basis of an unchanged currency sharing arrangement," he said, a reference to the previous requirement that only 25% of export earnings had to be sold to the bank.
"Such actions by the Reserve Bank only serve to consolidate the very negative perception of Zimbabwe's business environment by both locals and foreigners," said the industries president.
Commercial banks say an exchange rate of $1 to ZW$120 will be used when exporters buy back currency under the new export incentive scheme.
"This is an unofficial devaluation, but it might not lead to a greater flow of hard currency, as the parallel market rate is much higher. There is also considerable doubt as to whether the central bank will have the hard currency anyway - there is almost none at the moment and it is hard to imagine that there will be more in the next three months.
"This leads to the prospect of the exporters being paid in local currency, which no-one in the private sector wants," said one banker.
