Zimbabwe: President hails auction system
President Mnangagwa hailed the currency auction system launched by the Reserve Bank of Zimbabwe, saying most of the $147 million invested in the industry came from the platform, prompting the capacity utilization.
In his weekly column in The Sunday Mail, the Head of State and Government said that while there were few misguided elements abusing the system, the main purposes for which it was established, that of retooling industry, had been achieved.
He said he was pleased that the latest sector survey by the Confederation of Zimbabwe Industries noted that capacity utilization in the manufacturing sector had risen to 56.52% in 2021 from 47% the previous year, in 2020 .
President Mnangagwa noted that capacity utilization currently stands at 66.6%.
“The industry is growing. The same survey goes further: companies invested $147 million in new capacity, creating a capacity gain of 25.6%. Thanks to this remarkable investment activity, 57% of manufacturing companies recorded an increase in sales, with the whole sector achieving a 5.5% increase in exports, which rose from US$383 million in 2020 to US$404 million in 2021,” said President Mnangagwa.
“A key detail struck me in the CZI survey: a large part of the US$147 million invested in new capacity came from the Reserve Bank of Zimbabwe’s currency auction system! This is salutary, being given the negative feedback we often receive on the currency auction system.”
He said that despite the disbursement bottlenecks that have sometimes been associated with the FX auction system, it has had a remarkable impact on the economy.
“Why a currency auction? We created this system to help industry retool and increase access to affordable raw materials through greater access to foreign currency.
“Although the auction system has not always been able to disburse on time, and although we have had a few miscreants who have sought to abuse it, the primary purposes for which the facility was created are beginning to be achieved, with a remarkable impact on the economy,” President Mnangagwa said.
His remarks go against some elements who had sought to discredit the foreign exchange auction system by saying that it was characterized by a number of irregularities.
President Mnangagwa said increased industrial activity will go a long way towards achieving the country’s import substitution goals by improving the country’s overall economic performance through value-added exports and creating more jobs, especially For the young.
“While the auction system has created another exchange rate in the economy, thus causing potential arbitrage, this is a matter we are looking at,” he said.
President Mnangagwa said the economy is revealing structural imbalances at many levels, both real and financial, resulting in repeated cycles of instability and volatility.
“Indeed, that is what makes us a relatively more remunerative economy, but one that suffers from repeated imbalances. than in the financial sector, have on the market.
With this influence comes entrenched monopolies and abusive monopolistic practices.
“It doesn’t matter which sector you look at: we are a unique company, producing only key commodities, monopolies dictating to national markets,” he said.
Moving forward, President Mnangagwa said the Ministry of Industry and Trade must work quickly with all Ministers of State, the Zimbabwe Investment Development Agency and ZIMTRADE to map value chains province by province for consideration by the government as a matter of urgency.
“Second, preferably during the mid-term budget review, the Ministry of Finance and Economy
Development should work on the operationalization of the highly blocked sovereign wealth fund, the creation of a venture capital fund and, in consultation with the ministries of industry and trade and that of labor and social protection, advise the government on the instruments and agencies already in place that require refocusing, realignment and refocusing of the preparation and implementation of rural industrialization,” he said.
He also stated that the Department of Foreign Affairs and International Trade and the
Agencies and the Ministry of Finance and Economic Development should develop incentives for local and foreign investors who choose to invest in rural value chains and in commodity manufacturing sectors, in order to create essential competition.