eBusiness Weekly
Business Writer
The Reserve Bank of Zimbabwe has allotted US$2,1 billion through the auction system to the productive sectors of the economy since its introduction in June last year although delays in clearing allotted funds continue to bedevil the system.
According to statistics released by the central bank on Friday, the Main auction system has allotted US$1,85 billion while the SME auction has allotted US$267,4 million.
Despite recent criticism of inefficiencies associated with the auction system, the apex bank believes the foreign currency trading platform “remains the most diversified source of foreign exchange”.
More than 5 958 entities have accessed foreign currency through the main auction (1 822 beneficiaries) and the SMEs auction (4 136 beneficiaries).
Foreign currency accounts, however, remain the biggest source of foreign currency providing US$3,1 billion towards foreign exchange payments made between January 2021 and September 2021.
The interbank market has contributed US$275,6 million while the auction system has contributed US$1,5 billion to foreign exchange payments.
The bulk of the allotted funds (60 percent) have gone towards payment for raw materials (US$857.6 million) and machinery and equipment (US$421.7 million).
The residual 40 percent went towards payment for consumables, pharmaceuticals, and other critical needs of the economy, said the RBZ.
The latest figures come as industry representative body the Confederation of Zimbabwe Industries (CZI) has said the auction system is inefficient.
In its latest update to its members, CZI said the rapid depreciation of the Zimbabwe dollar on the parallel market, is a result of the inefficiencies or non-adherence to strict Dutch auction rules by the central bank.
“The auction was set up as a price discovery and transitional mechanism and now it has morphed into a source of sub-optimally priced foreign currency,” reads part of CZI’s briefing to members.
“It is now profitable to import products rather than producing and sourcing locally due to the exchange rate distortions that have emerged from the auction market.”
CZI believes the Reserve Bank of Zimbabwe has not adhered to what was agreed on in putting up the Dutch foreign currency auction system, with knock-on effects.
“In truth, we find ourselves in a situation that could and should have been avoided had the appropriate policy prescriptions been in place,” it said.
“After starting well, the Dutch foreign auction has now been distorted by a lagging supply stretching over 15 weeks in some instances and this has become a driver of the widening parallel market premium,” according to CZI.
