Government urged to increase forex retention to 50pc
THE Government needs to raise the foreign currency retention rate of 12 percent that is remitted by mining companies to a more robust 50 percent. Such a move would invigorate the economy and spur the growth of local industries, a vital step towards reducing unemployment and addressing the prevailing trade imbalances, the chief executive officer of Buy Zimbabwe, Mr Munyaradzi Hwengwere has said.
Miners say they want to be allowed to keep 70 percent of their dollar earnings to allow them to import equipment and mining consumables, including fuel. Mining generates most of the export earnings for the country which is facing a severe shortage of dollars.
In an interview on the sidelines of the Zimbabwe National Chamber of Commerce (ZNCC) Midlands Annual Awards ceremony held over the weekend, Mr Hwengwere said for the economy to grow, there is a need to develop local industries.
“Right now mining is the largest foreign currency earner. Sadly, only 12 percent of the mining order book is domesticated in Zimbabwe which means the ability to create employment in other sectors is very low,” he said.
Mr Hwengwere said the first thing the Government needs to do is to significantly reduce the 12 percent to 50 percent.
“There is a need for the Government to force mining companies to retain at least 50 percent of foreign currency earnings to the country against the current 12 percent which leaves the country in dire need of foreign currency earnings. This development means mining companies will need to work on programmes to make sure that they support local industries and local businesses,” he said.
Added Mr Hwengwere, “Unless that happens we will remain in the same vicious circle of currency problems that we are having in the country. We still have huge trade imbalances, US$17 billion over the past 20 years that we have taken out to other countries.”
He said what needed to be done was the implementation of the Local Content Policy passed by the Cabinet.
“Its implementation of the local content policy that was passed by Cabinet to say mining companies cannot have anything above 50 percent. That needs to be implemented, there is a policy already but the implementation has not been thorough.
“So we just need to make sure that people know what they need to do, we need to make sure that for example bore mills and a lot of equipment can be secured in Zimbabwe. Let’s just cut our imports, let us use the money to support local industries,” said Mr Hwengwere.
He said over 60 percent of foreign currency earnings in the mining sector come from Zimplats, Mimosa, and Unki Mines. As Buy Zimbabwe, he said they are advocating for the total ban of raw material exports to grow the local industries.
Chronicle