eBusiness Weekly
Tapiwanashe Mangwiro
The Bankers Association of Zimbabwe (BAZ) says has received commitments from the apex bank that it is going to clear all outstanding foreign currency auction allotments backlog by end of this month.
This comes as the Reserve Bank of Zimbabwe (RBZ) keeps on giving deadlines on promising to clear all outstanding allotments which it fails to meet on several occasions.
BAZ chief executive, Fanwell Mutogo, told the Business Weekly that the RBZ was basically allocating more than what they were getting, resulting in the creation of a huge backlog.
“I must say that there has been an adjustment in terms of making sure that they allocate only that which they have,” he said.
Without giving figures, he said the current backlog is on a reducing trend.
“Our backlog figures are reducing. Yes, according to the previous promise, they were supposed to have been retired by the end of May, but I think because of some administrative issues, the deadline has been extended to the end of June and we have commitments from the RBZ,” Mutogo said.
Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza, said that the backlog is still there and some of our members are still reporting additional amounts on the already existing backlog.
“We are going into auction number 100 this week, but we have members who have not yet been allotted their auction number 75 and some as far back as auction number 72,” Matsheza said.
He, however, acknowledged that saying the RBZ is not working on the backlog will not be true and an honest assessment.
“The Bank is working on the backlog definitely, but it is not supposed to be the case, industry needs to be given their money when bids are successful. We do not want the current situation as it affects plans by industry,” Matsheza added.
On the operations of the auction system, Mutogo said settlement of successful bids is done within two weeks.
“There are no backlogs post May 31, 2022, as the Bank has managed to disburse all the allotted bids within two weeks. The Bank seems to be auctioning what they have now post May 2022,” Mutogo said.
However, Matsheza argued that the backlog has continued to increase even after the May 31 date as their members are still not getting what was allotted to them.
The CZI president added that the RBZ has always promised us that they are going to clear the backlog but they never did.
Matsheza concluded that; “The problem is that the apex bank just promises us and does not deliver, besides that we have a commitment that we were given, but we do not have a deadline of when they will be cleared. Our members are still battling forex backlog and the situation is worsening as the central bank takes between 10 weeks and 12 weeks to clear.”
Speaking to Business Weekly earlier in the month, RBZ Governor, Dr John Mangudya said, the May deadline has since been missed with approximately US$135 million still in arrears. Describing expunging the backlog as a process than an event, Dr Mangudya said the apex bank was ‘working frantically well’ to clear it.
“We are continuously paying, this is not like an event, it’s a process, and we are paying on a daily basis.
“Right now, thumb suck, I think we are down now to US$135 million,” said Dr Mangudya at the time.
The central bank governor also revealed that the apex bank was going to incur exchange rate losses stemming from the foreign currency backlog.
Cumulatively, the foreign exchange auction allotments since the inception of the foreign exchange auction system total close to US$3 billion. The bulk of these funds were channeled towards the procurement of raw materials, machinery and equipment.
The auction system was created to bring transparency and efficiency to the allocation of scarce resources like foreign currency. However, the widening gap between the official and black market rates continues to be a cause of concern for many companies.
On the parallel market, one US dollar can sell for $600, whilst selling at $352.0626 as at the recent auction.
“From where we stand, this is really a national problem because when you look at it, it is about the behaviours that we are all seeing in this market of rent seeking and people taking advantage of the situation,” Mutogo said.
He said it is very difficult for them to really try and pin down where this lack of discipline is really coming from.
“I think it is the nature of this economy. I do not think you can see this happening in other economies, but from where we sit, it is very difficult for us to control everything. What we can control is what we are doing officially in terms of what is happening at the auction.”
Latifa Kassim, head of treasury at Nedbank, added that the auction system under the current situation where we have got foreign currency scarcity “is the best route to try and spread evenly as much as possible these scarce resources to the rest of the market.”
