The RBZ’s auction system is still struggling to clear foreign currency backlogs that go back as far as January according to reports made by disgruntled businesses that are not satisfied with the way the auction keeps getting tripped by backlogs. According to various industry leaders the Zimbabwean business community needs about US$320 million per week and the auction was only supplying a tenth of that each week with auction allotments averaging about US32 per week.
The result has been that most businesses have been left with two unsavoury options: either they fold and shut shop or curtail operations or they go the illegal route of going to the black market. A lot of entities have chosen the last route fuelling the rise in the black market rate as demand is still outstripping supply.
CZI president Kurai Matsheza had scathing words for the RBZ. He said the RBZ’s governor kept promising that the central bank would clear all foreign currency arrears but had failed to do so on three occasions in the past and it did not look like that would change anytime soon. He revealed that some members had foreign currency allotments from January that still had not yet been paid.
Zimbabwe National Chamber of Commerce CEO Christopher Mugaga believes that the woes of the auction system lie in the fact that it does not fairly compensate those who bring in the foreign currency who are practically “forced” to give up the foreign currency at an artificially low rate. The result is that those who generate foreign currency are always looking for ways to keep it from getting to the auction.
His sentiments are shared by many analysts including the author. The government’s Dutch auction system is rigged. There is no better way to describe it than to use the word rigged here. A fair auction system cannot have a rate that seems almost static and yet fail to clear such a massive backlog.