'Banks propel importation of finished products'

'Banks propel importation of finished products'
Published: 18 July 2017
ZIMBABWEAN banks have been accused of allocating foreign currency for the importation of finished garments instead of raw materials, thereby pushing local clothing manufacturers further towards the edge.

Zimbabwe Clothing Manufacturers' Association (ZCMA) chairperson, Jeremy Youmans told NewsDay that banks were not prioritising the importation of raw materials, but were providing money for the importation of finished products.

"Many companies are facing long delays in having payments for imported raw materials approved through their banks," he said.

"We do not understand this, as the allocation of nostro funds for raw materials in value addition sectors is priority one according to the Reserve Bank directives.

"Meanwhile, there are obviously nostro funds being allocated to pay for the huge amount of imported finished garments.

"Clothing has one of the greatest value addition factors of all sectors and it is a significant employment creator, so this needs to be attended to with better monitoring of allocations of nostro funds by the banks."

Youmans said the central bank should investigate this practice, as that was not what they understood to be the intention of the priority-based allocation of foreign currency by the Reserve Bank of Zimbabwe to assist the revival of the economy.

Because of this, Youmans said, the clothing industry was operating at 23% capacity.

He said clothing manufacturers were adaptable and this represented a huge opportunity for the economy, if driven in the right direction.

"This is because most of the factories still exist, along with most of the machinery from the prior peaks of output for the industry," Youmans said.

"Where it is not available, it requires relatively small amounts of capital expenditure to achieve significant growth.

"There is need for working capital, as well though, and this is a priority for the industry over capital expenditure requirements.

"Without a greater focus on local procurements from all stakeholders, the capacity utilisation will not change greatly."

With direct interventions and focus, Youmans said there could be a significant growth very quickly, in terms of gross domestic product contribution, export revenue and employment.

Despite all these challenges, he said there are some companies that have shown "growth and more companies are targeting exports now, but generally the industry remains distressed".

Efforts to get a comment from Bankers Association of Zimbabwe president, Charity Jinya and central bank governor, John Mangudya were fruitless.
- newsday
Tags: Banks,


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