The Reserve Bank of Zimbabwe (RBZ) has stated that there is no shortage of foreign currency in the economy, emphasizing that supply actually exceeds the demand from entities with valid foreign invoices.
RBZ Governor, Dr. John Mushayavanhu, explained that the foreign currency received from export surrenders surpassed market demand, indicating that the necessary export requirements were being met.
This contradicts complaints from businesses about foreign currency shortages, which often claim that banks are unable to fulfill foreign invoices due to a lack of currency availability.
Exporters are required to surrender 30% of their export earnings to the central bank at the prevailing exchange rate, which ensures there is enough foreign currency for non-exporting entities that need it for essential imports. This system also provides exporters with local currency to meet domestic obligations such as taxes and statutory payments.
Dr. Mushayavanhu mentioned that last Thursday, the central bank entered the market to sell foreign exchange from export surrenders, offering about US$20 million, but the banks were only able to purchase US$15 million. He stressed that anyone with an import invoice or foreign payment can now go to their bank to have it honored, as there is no foreign exchange problem. The supply of foreign exchange currently exceeds market demand.
The central bank uses export surrender proceeds to inject liquidity into the market, supplementing the foreign currency available through the Willing Buyer Willing Seller platform. However, businesses have reported challenges accessing foreign currency due to perceived shortages.
Dr. Mushayavanhu also urged informal businesses to formalize their operations to access loans at favorable rates and benefit from Government-supported funding schemes. In a recent podcast interview with ZTN Prime, he clarified that informal businesses can qualify for the Targeted Finance Facility (TFF) if they have bank accounts, an essential aspect of formalization.
The RBZ governor also encouraged the public to deposit their money in formal banks, warning of the risks associated with keeping cash at home. He noted that robberies targeting individuals holding large sums of cash outside of banks are on the rise. “Your money is safer in the bank,” he said, pointing out that banks offer interest on deposits, allowing individuals to earn returns on their savings.
Dr. Mushayavanhu also addressed the issue of counterfeit currency circulating within the informal sector, an issue that banks are better equipped to address. He acknowledged the need for more incentives to encourage people to participate in the formal banking system.
He highlighted the damage done to the savings culture by the episodes of hyperinflation, which wiped out savings in 2008. While the Government has legalized the multi-currency system until 2030, when the economy is expected to be fully de-dollarized, high bank transaction fees continue to discourage people from saving.
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