Local Industries say they are yet to realise the benefits of the recently introduced interbank foreign currency market, as they continue to struggle accessing hard currency.
Interbank market was introduced in February this year to address challenges previously faced by companies when sourcing forex to acquire raw materials and spares.
However, a sizeable number of firms have confirmed insufficient or unavailability of the said currency thereby seeking the market to be more efficient and independent as many enterprises need to settle their obligations with external creditors.
In its half-year results ending June 30, 2019 cement manufacturer Lafarge, highlighted that the interbank market was not providing enough foreign currency required to fulfil its external debt.
Likewise, the scarcity of foreign currency has led to the adjournment of capex projects and routine plant upkeep.
“The liberisation of the foreign currency markets, through the introduction of the interbank market, has provided a viable means for payments to foreign suppliers. However, there is still a significant backlog of foreign payments that are due.
“The current mechanism is yet to yield adequate forex for the company’s requirements as the foreign currency availability through formal channels remains grim. This has resulted in key plant maintenance and capex projects being delayed,” said Lafarge.
Concurring with Lafarge sentiments, Dairibord chief executive Anthony Mandiwanza, noted firms have not been able to get enough foreign currency on interbank, in some instances, the money was unavailable at the quoted rate thereby accessible after paying a certain premium.
Furthermore Mandiwanza pointed out the need for more operational efficiency and honesty on the interbank market.
“There is need for more interbank transparency, we are not accessing the foreign currency as we anticipated when the interbank market was introduced.
“At times the foreign currency is not accessed at quoted rate (amount), which is a precursor for speculative behaviour in the economy,” said Mandiwanza.
He said foreign currency deficiency was detrimental to industrial capacity utilisation as production levels are under direct attack from the lack.
“Also, there is need to enhance foreign currency availability on the interbank, because unavailability of foreign currency is a huge problem leading to a slowdown in production,” he said.
The interbank market was introduced this February to normalise foreign currency trading and curb the inflationary parallel market, and the gap between the interbank and the parallel market rate is anticipated to narrow down in view of the latest measures.
According to RBZ by mid-September the interbank foreign currency market had traded US$799 million since its introduction in February