The Chamber of Mines of Zimbabwe (CoMZ) is engaging the Reserve Bank of Zimbabwe (RBZ) with a view to finding a solution to challenges caused by the new foreign currency regulations announced by the central bank in the Monetary Policy Statement.
Under the new foreign currency regulations, the exporters are no longer required to exhaust their foreign currency earnings as was the case previously, but the surrender threshold has been reviewed upwards from 30 percent to 40 percent.
It is against this background that some exporters, particularly in the mining sector, say they are now having shortfalls meeting their obligations that require foreign currency.
In an interview with the Herald Finance and Business, CoMZ chief executive officer Mr Isaac Kwesu, said miners are having to augment for the shortfalls by turning to the foreign currency auction system.
However, the challenge is that some of their bids are not going through, thus diminishing their ability to sustain production.
“It’s an issue that has come up with some members saying that the 40 percent foreign currency surrender is on the up side,” said Mr Kwesu.
“Depending on an individual exporter’s cost structure, some miners are having shortfalls in terms of their foreign currency needs and have had their capacity to sustain production curtailed.
“You will be aware of the foreign currency auction system and our members are also participating in it but unfortunately not every bid on the auction is always successful.
“So it is against this background that we are engaging the RBZ to consider giving priority to bids from exporters and not just miners but all the exporters because I think it’s ideal we pull all stops to make sure we sustain businesses that are bringing the forex in the first place,” he said.
RBZ Governor Dr John Mangudya, was not available for comment at the time of going to print while the Ministry of Mines and Mining Development, referred questions back to the bank.
Dr Mangudya has, however, in the past, explained the need to strike a balance between exporters’ needs to retain hard currency and the need to meet the country’s other requirements that need foreign exchange.
The RBZ boss has previously noted that there is need to retain a chunk of the exporters’ earnings so that Government can then meet other needs like healthcare and infrastructure development projects.
Government has a tough call to make on the subject as social services like healthcare and infrastructure development projects such as construction of roads are key under the country’s economic blueprint the National Development Strategy 1 (NDS1).
Meanwhile small scale miners, through the Zimbabwe Miners Federation (ZMF), have called for a general council meeting of the federation to discuss pertinent issues aimed at maximising on their production.
Government has reiterated the importance of the small scale mining sector to the country’s mining sector strategy as some rich mineral deposits are more amenable to small scale mining than conglomerate mining.
In a notice to members, ZMF Secretary General Mr Morgan Mugawu said the meeting will also discuss amendment of the ZMF constitution as per direction of Special General Council Meeting held in 2019.
“You are cordially invited to attend to a Special General Council Meeting to be held in Harare on the 16th of March 2021,” advised Mr Mugawu.