The local exporting community has described the new foreign currency retention thresholds announced recently by the Reserve Bank of Zimbabwe (RBZ) as a positive development that will improve their business operations.
In his 2023 Monetary Policy Statement announced recently, RBZ Governor, Dr John Mangudya increased foreign currency thresholds for domestic and foreign currency sales to 85 and 75 percent respectively, a move that has brought cheers to local exporters.
Previously exporters retained 60 percent in foreign currency from their exports and often complained that the higher export surrender requirements made it difficult to access forex for critical capital expenditure and operations financing.
National trade development and promotion agency, ZimTrade, said the new thresholds are expected to bring relief to exporters as this has been a major issue raised during engagements with Government Ministries and related institutions.
During several Exporters’ Breakfast Seminars held in Harare, Bulawayo, and Mutare last year, local businesses said the previous retention regimes resulted in inadequate forex to import raw materials and capital equipment, which made it difficult to increase the production of export products.
ZimTrade chief executive office, Allan Majuru, said the adjusted retention levels, which address concerns raised by local businesses, will give confidence to existing and potential exporters, which in turn will contribute towards export growth.
“The increase of retention to 75 percent is a positive development that is expected to motivate exporters to produce more. “Exporters will also have access to more foreign currency for retooling and working capital thus easing pressure on the foreign currency auction system, said Majuru.
Local exporters agreed that the overall increase in the forex retention threshold and the reduction in interest will bolster production and consequently export volumes.
The new retention thresholds are expected to go a long way towards improving the profitability of exports and on the other hand, the businesses will be more efficient in the importation of raw materials.
Victoria Jakazi, managing director of Mutare-based Wattle Company of Zimbabwe said the revised retention levels are an incentive to local industry.
“We are happy the authorities have heard the plight of the exporters and have positively incentivised us through this positive move.
“We hope to keep engaging authorities so that we can continue improving the operating environment of exporters,” she said.
Shep Mafundikwa, Founder of Mosi-Oa-Tunya, a Zimbabwean exporter of high-end cigars said the new retention levels mean they will have easy access to forex to meet their import requirements.
“The increase is a positive development, it leaves us with more forex for import and in addition, local costs have now shifted to become United States dollar based so additional forex will help in that regard.”
Exporters in some sectors such as horticulture, whose production is seasonal, have indicated that they will appreciate if the retention is further increased so that they retain value over longer periods of time.
Some exporters also indicated that they were benefiting from the incremental export incentive, which has been removed and hope that a similar arrangement will be introduced to motivate local businesses to venture into the mainstream export business. – The Herald
