RBZ increases forex allocations to firms Manufacturers condemn price hikes
THE Reserve Bank of Zimbabwe (RBZ) has moved in with more allocations of foreign currency to manufacturing firms under the $600 million nostro stabilisation facility to enable companies to procure critical raw materials and increase supply of goods.
Confederation of Zimbabwe Industries (CZI) president, Mr Sifelani Jabangwe confirmed this yesterday.
The move follows recent speculative events, which precipitated loss of confidence in the market and sparked panic buying of basic consumer goods.
“The RBZ has already moved in with more allocations of foreign currency and manufacturers have proceeded to increase production resulting in more products on the shelves,” said Mr Jabangwe in a statement.
He said a frenzy of panic buying was taken advantage of by speculators who bought goods and resold them at inflated prices.
Mr Jabangwe implored manufacturers to remain focused despite the prevailing liquidity MANUFACTURERS through the Confederation of Zimbabwe Industries (CZI) have condemned the recent spate of price increases accusing retailers of profiteering. Addressing delegates who attended a pre-budget dialogue symposium organised by The Chronicle in Bulawayo on Tuesday, CZI Matabeleland president, Mr Joseph Gunda, said producers under his association had agreed not to increase prices despite shortages of foreign currency as they prefer engaging the apex bank for allocations towards critical raw material imports. He said as an association they were disturbed by the recent price increases, which he felt were unjustified and bent on sheer profiteering. “We are seeing price hikes in retail shops and we do not know what triggered them. We need to know whether the suppliers have increased challenges and also urged them to cooperate with Government in instilling confidence in the market. The apex bank secured the $600 million nostro stabilisation fund from AfreximBank as part of measures to improve liquidity in the economy and boost domestic production. Mr Jabangwe said the recent panic buying craze occurred when the stocks were low, but prices. This is profiteering and its a disease that we have as Zimbabweans.
“We have said as CZI that we are not increasing prices but would rather pressure RBZ for allocations. This is an attitude problem that we have as Zimbabweans, we like imports and profiteering.”
Participants also expressed shock over price increases and there are fears that continued price increases could retard gains made under import management.
“Prices have been going up everyday in the past weeks and this is seriously affecting consumers. The Government has to do something to control this madness,” said one of the participants.
“There is lack of discipline and that should not be allowed to continue. There should be a reason for prices to go up not just for the sake of profiteering.”
In some shops prices of basic commodities have nearly doubled especially cooking oil. Delegates said it was shocking that even prices of products that did not require imported raw materials such as bricks have also gone up. adequate for normal consumption.
He said the low stocks were created by foreign exchange shortages which resulted in firms failing to buy raw materials.
Foreign currency supply is generally low in the economy between August and March when there is no activity on the tobacco auction floors.
Tobacco is one of the major foreign currency earners hence when there is trade of tobacco at the auction floors, availability of forex improves.
Mr Jabangwe said the panic buying spree happened on a weekend when suppliers were closed and could not respond to stock outs.
He said CZI would continue to push for value chain development and working with relevant authorities and stakeholders towards strengthening and reviving value chains as part of the long term solution to raw material supply challenges.
Mr Jabangwe, however, said the nostro stabilisation
CZI said it will maintain close contact and dialogue with the central bank and urged companies to use the organisation when they have challenges regarding the allocation of forex for raw materials imports.
Meanwhile, retailers have said the price increases are a result of low commodity supplies from producers. Confederation of Zimbabwe Retailers (CZR) president, Mr Denford Mutashu said improved supplies would stabilise the prices.
“Cooking oil producers have not increased the price of cooking oil despite its shortage on the market and as CZR we do not condone the hiking of prices to increase profits.”
Mr Mutashu blamed unregistered retailers for increasing prices but hoped that measures being put by Government to ease foreign currency shortage were going to yield positive results soon.
In the meantime, Mr Mutashu suggested that Government should allow those retailers with the capacity to import cooking oil to do so until local producers are able to meet demand. package was a short term measure and challenged industries to focus on long term strategies that require boosting of exports and collective effort in instilling discipline and market confidence.
He urged firms to continue increasing their production capacities to substitute imports and save the scarce foreign exchange resources as well as reduce the fiscal deficit to manageable levels.
The CZI boss assured the public that given continued flow of foreign currency, the manufacturing sector would be able to continue supplying goods on the market.
“The Confederation of Zimbabwe Industries would like to state that though the situation is difficult, the economy is improving. The improvement can be seen through improved revenue collections, reduced trade deficit and food security. The improvements have come about despite the absence of major external support,” said Mr Jabangwe.