eBusiness Weekly
Nelson Gahadza
THE Chamber of Mines of Zimbabwe says the Government should put in place supportive measures for exporters that will guarantee increased foreign currency generation as a measure to bring stability to the exchange rate.
The exchange rate had in recent times become volatile which prompted the Reserve Bank of Zimbabwe (RBZ) and Finance and Economic Development Ministry to hold an urgent meeting to find solutions to stabilise the currency market.
The Chamber of Mines, which represents largest exporters and earners of foreign currency, was not represented at the meeting, but Colin Chibafa, the Chamber’s President, told the Business Weekly that it engages the authorities regularly.
“On October 1, 2021, the Chamber leadership held fruitful meetings with the RBZ governor and discussed key foreign currency matters impacting the mining sector. These matters are under consideration by the governor and Ministry of Finance,” he said.
Mr Chibafa said there is a need to ensure that exporters remain viable to sustain foreign currency generation.
“All bottlenecks that are currently weighing down the performance of the export sector should be resolved to unlock the growth potential of foreign exchange earnings.
“Exporters currently surrender 40 percent of export proceeds to the RBZ but are faced with increasing demands from various government agencies to pay levies and taxes in foreign currency.
“When all these are taken into account, most mining companies do not have sufficient foreign currency to fund their operations,” he said.
He added that compounding this is the excessive pricing utilising parallel market rates by local suppliers and this is negatively impacting on the viability of exporters.
“We believe that the Government can play a key role in stimulating the demand for the local currency by increasing usage of the local currency, especially for exporters and this will bring a measure of stability to the exchange rate,” Chibafa noted.
He highlighted that when it comes to utilisation of the available foreign currency, authorities should ensure an efficient auction market that matches available supply with legitimate demand from key and essential sectors of the economy.
“Speculative demand must be curtailed and together with excessive liquidity in the market,” he said.
At the meeting held this week, the RBZ and leaders of the business sector underscored the need to maintain the macroeconomic stability momentum experienced in the past 12 months and based on economic fundamentals.
The central bank undertook to regularly monitor monetary and foreign exchange developments to ensure the exchange rate remains stable, to continue using the auction system and to ensure that delays between successful bids and allotments of foreign currency do not recur.
The country is envisioning a US$12 billion mining industry by 2023. PGMs are expected to contribute US$3 billion with production expected to jump from about 979 thousand ounces in 2018 to about 2,5 billion ounces annually in 2023.
Gold and diamonds will contribute US$4 billion and US$1 billion respectively, while chrome, iron ore and carbon steel will contribute US$$1 billion while coal and hydrocarbons will contribute the same. Lithium at US$500 000 while other minerals will constitute US$1,5 billion.
Chibafa said the mining sector remains committed to play its part to ensure the industry maximises contribution to the socioeconomic development of the country.
“To this end we are working closely with the Government to ensure all challenges that are weighing down the performance of the mining sector are addressed,” he said.
He noted that the reopening of global economies and the anticipated strong recovery had resulted in an upswing on the demand for commodities and hence metal prices.
“However, we have recently started to see some headwinds to global growth and a cooling in the prices of some metals, notably PGMs,” he said.
