…as rates continue to rise.
Small to Medium Enterprises and Citizens are yet to feel the positive effects of the Foreign Exchange Auction System which was introduced by the Reserve Bank of Zimbabwe to provide a viable formal forex exchange platform and contain the parallel forex exchange rates which were rising at uncontrollable rates.
Although the Auction system has managed to set viable exchange rates on a weekly bases, SME’S and citizens continue to feel the pain of sourcing the US dollar from the black market at higher premiums to procure basic commodities and pay for crucial services that require the green bucks.
Conditions that were set by the central bank for prospective clients to participate on the platform are very difficult for SME’s to participate. For instance, Individuals and entities need to have deep pockets to source forex from the platform as they cannot make a bid of less than US50 000.
Although this figure is reasonable to big players, the majority of SME’s cannot meet that figure as it is astronomical to them.
Yet these entities have been and are still crucial in sustaining Zimbabwe’s Economy as they have grown to bridge the massive gape that was created by the death of the industrial and manufacturing sector in the country. So they are left with no option but to source the US Dollar from the parallel market at higher premiums after which they set higher prices for their services to match the black market exchange rates.
The Vice President of Zimbabwe Integrated Traders Association, Robert Bhamu said the conditions which were set for entities to source forex from the Auction System are pushing SME’s to the parallel market where they are sourcing the US Dollar at higher premiums.
This is affecting the viability of their operations as they are forced to charge their goods and services at rates inspired by the black market, making their services expensive when comparing them to those of companies that are getting forex from the Auction system.
“Our businesses are no longer viable because our goods and services are now more expensive compared to those of companies that are getting forex from the auction system because we follow the parallel market exchange rates.
“The conditions which were set by the RBZ’s auction system are hard for SME’s to meet, 50 000 is a huge figure. We are calling on the Central Bank to review that figure and set it at a reasonable mark which allows SME’s to source forex from the platform. We made this request recently in our presentation to the Parliamentary Potfolio Committee on SME and we hope that it will be heard” said Bhamu.
This has also affected the general populace who need US dollars to pay for basic services like rentals as most property owners demand rentals in forex .
Since the figures required for rentals are small, people tend to buy the green bucks from the parallel market at higher premiums.
“If it is possible, RBZ should provide a platform for people to buy smaller US denominations through formal systems where it will be cheaper to source. Buying forex from the parallel market is expensive but we have no other option because that is the only place where we can quickly source it to pay for rentals and other services,” said Tawanda Chingara.
As of today, the US dollar is trading between US$1:ZWL$100 to US$1:ZWL$115 on mobile platforms like Ecocash, One Money and Zipit, and US$1:ZWL$70 with cash on the parallel market. The latest results from the Forex Auction Exchange from yesterday pegged the U.S Dollar at 1: ZWL$ 76,7.