Business commends RBZ’s tight monetary policy

Business leaders have commended the Reserve Bank of Zimbabwe for maintaining a tight monetary policy, which has stabilised the exchange rate of the ZiG against the US dollar.

The sentiment was expressed during presentations to the Parlimentary Portfolio Committee on Budget Finance, Economic Development and Investment Promotion regarding the Monetary Policy Statement delivered by RBZ Governor Dr John Mushayavanhu recently.

Confederation of Zimbabwe Industries economist Dr Cornelius Dube highlighted the importance of stability.

“Another positive is the tight monetary policy stance,” he said. “We prefer stability to be prioritised at all costs, and the current level of stability, characterised by a declining parallel market premium, is a welcome development.

“If this wave of stability is sustained, confidence in the Zimbabwean currency may begin to materialise.”

Dr Dube also welcomed the introduction of interest payments on savings for both ZiG and US dollar accounts, though he noted that the interest rates, 5 percent for ZiG savings and 2,5 percent for US dollar savings, were still lower than bank charges, which might limit their attractiveness.

Similarly, Mr Tapiwa Karoro, president of the Zimbabwe National Chamber of Commerce, praised the RBZ’s movement towards a market-driven exchange rate.

“The central bank has certainly made measures to try to move towards greater market-driven exchange rate determination.

“As business, we are in favour of a market-driven exchange rate. Yes, we appreciate that this cannot be done overnight. Therefore, it needs to be underpinned by a very clear de-dollarisation roadmap with very clear milestones, where the market can move in tandem with the monetary and fiscal authorities in terms of knowing where we are as an economy and where we are as economic agents,” said Mr Karoro.

He acknowledged the gradual process required for this transition, emphasising the need for a clear de-dollarisation roadmap with specific milestones.

Mr Sevious Mushosho, a board member of the Confederation of Zimbabwe Retailers, urged the RBZ to establish a foreign currency facility for retailers.

He proposed a forex access window at the RBZ where retailers could obtain foreign currency at interbank rates by processing a certain percentage of sales in ZiG.

This would help prevent mismatches between local currency collections and foreign currency needs for supply payments.

Additionally, the organisations raised concerns about the high costs of compliance with regulations, which hindered business operations. They recommended providing incentives to encourage informal sector businesses to formalise their operations.

In response to the high compliance costs, President Mnangagwa has already directed that they be reduced to enhance business competitiveness.