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The Confederation of Zimbabwe Industries (CZI) has reported that businesses benefiting from the Reserve Bank of Zimbabwe (RBZ) auction system have experienced enhanced capacity, product supply, efficiencies, and financial performances. The RBZ’s recent auction update revealed cumulative foreign exchange auction allotments totaling US$4.12 billion since the inception of the Foreign Exchange Auction System in June 2020.
A significant portion of these funds was allocated for the payment of raw materials, machinery, and equipment, indicating increased investments in manufacturing processes by businesses. CZI President, Mr. Kurai Matsheza, highlighted that the industry has observed improvements in local product supply, underscoring the positive impact of funds obtained through the auction.
The Dutch auction system, launched by the central bank in June 2020, aimed to enhance transparency and efficiency in foreign currency trading, acting as a price discovery mechanism for the local currency. CZI President Matsheza emphasized the importance of continuing the auction system to enable businesses to access affordable funds for working capital.
The Government’s Industrial Development Policy (IDP) (2024-2030) targets a manufacturing growth rate of at least 2 percent per annum, increased manufacturing sector investment, higher manufactured exports, and an elevated share of manufacturing employment by 2030. Despite challenges such as power blackouts, the manufacturing industry witnessed marginal growth in 2023.
IH Securities reported a 2.2 percent growth in the manufacturing industry in 2023, with improvements expected in electricity supply and ongoing investments to boost capacity utilization to 60 percent in 2024. The 2024 National Budget report highlighted the positive impact of access to foreign currency through the auction system on the manufacturing sector.
The government is finalizing the formulation of the Zimbabwe National Industrial Policy (2024-2030), aligning it with Vision 2030 and international and regional policy frameworks. The policy aims to facilitate structural transformation, increase the country’s capacity for value addition and beneficiation, and promote collaboration between the private sector and higher education institutions.
In the December 2023 RBZ auction report, US$3.91 million was allotted under the retail foreign exchange auction, with 58 percent allocated for raw materials and machinery and equipment. The remaining allotments supported services, consumables, retail and distribution, pharmaceuticals and chemicals, and manufactured goods.
The introduction of the wholesale foreign exchange auction contributed to a decline in the parallel market premium from over 140 percent in May 2023 to around 35 percent in November 2023, according to RBZ.
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