Even though it’s credited by many for bringing a bit of stability to Zimbabwe’s economy, a lot of businesses seem to have lost faith in the RBZ’s official auction. In a recent meeting between the RBZ and industry stakeholders, many leaders candidly expressed their disappointment in the foreign currency auction and the Dutch system upon which it relies. They said they preferred the Interbank rate which was prevalent in 2019 instead.
In our meeting with the RBZ (on Monday this week) we called for the total removal of the foreign currency auction system and return to the interbank system or do an overhaul of the system.
The auction rate (ZWL$90:US$1) is not in touch with reality and as long as the RBZ keeps rates like that, backlogs won’t be cleared. We need realistic approaches to this.
Businesses were also scathing in their criticisms of some of the government’s policies and laws which seek to criminalise legitimate business survival techniques such as buying foreign currency from the black market as there is no alternative for them.
Bad policy blurs the lines and results in criminal activity co-mingling with legitimate business survival decisions in a forex mispriced system,
A heavy-handed approach to a problem that has its cause squarely in sub-optimal policy implementation creating arbitrage opportunities would be unsettling to the markets. It is our considered view that the measures agreed at the consultative dialogue should be given time to take effect as they are going to most likely cause an adjustment of behaviours in accordance with their efficacy on the challenges being addressed. Essentially, at the centre of this is a policy correction, when policies fail we should not arrest people, we should correct the policies for efficacy.Kurai Matsheza of the Confederation of Zimbabwe Industries
It’s doubtful the government will heed these warnings and exhortations from captains of the industry. The statement released after this meeting itself is telling. The statement focused on how businesses were supposed to stop “manipulating” prices and exchange rates instead of the real issues bedevilling the economy. The government is looking for scapegoats for the spike in rates and not taking any responsibility as always.