Zimbabwe grosses $4 billion

Published: 04 October 2017

Zimbabwe grossed $4 billion during the first nine months of this year through exports and foreign currency inflows from mostly Diaspora remittances, the central bank said on Wednesday.

Speaking at a Confederation of Zimbabwe Industries meeting to address supply challenges, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya, however, said it was unfortunate that the foreign currency was not circulating efficiently within the economy.

"During the month of January to end of September, this economy earned $4 billion in foreign currency from exports, diaspora remittances and other inflows that is service inflows.

"That is not small change but how it is being utilized is the challenge. Some of it is going out of the economy to import things that are useless, others keep it at home because people will always remind them of 2008," he said.

Dr Mangudya attributed the hoarding of foreign currency and selling of currencies on the parallel market to lack of confidence in the banking sector.

"So because of lack of confidence, the money does not circulate efficiently. So, that's what we are going through," he said.

He said even foreign currency from diaspora remittances was also being traded on the parallel market.

"We are getting $55 million per month from diaspora remittances. Its net income to Zimbabwe because there is no cost of production.

"The diaspora remittances at $55 million percent month is almost equivalent to our requirements for fuel for the whole month but because the money is not circulating, we don't feel the impact. That's why we need a formalized system of dealing with currencies," he said.

Zimbabwe is battling to contain a cash crisis, caused chiefly by externalisation and hoarding, resulting in the resurrection of the money changing business which had ended after the introduction of multiple foreign currencies system in 2009.

Bond notes were introduced last year as an export incentive and to alleviate cash shortages after the United States dollar, which is Zimbabwe's primary trading currency, disappeared from the market due to various reasons.

But, the bond notes have become scarce as well, prompting many to conclude that the surrogate currency had failed to achieve its desired goals.

The notes are now largely visible in informal channels where illegal cash dealers sell them at a premium to desperate people.

- New Ziana