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Mushayavanhu snubs business

Mushayavanhu snubs business


The Reserve Bank of Zimbabwe (RBZ) governor, Dr John Mushayavanhu, has snubbed the business community after he remained mum about the plan to convert all companies’ outstanding foreign currency auction system allotments into a two-year ZiG denominated instrument or commercial paper at an interest rate of 7.5% annually.

Local firms were compelled to surrender the Zimbabwe dollar equivalent to the central bank in advance, but didn’t get their hard currency.

This resulted in companies sourcing the greenback from the alternative market, where the premiums are punitive.

Business leaders told Business Times that Dr Mushayavanhu, kept silent on the status of the commercial paper and this has left the companies with thin working capital

Mike Kamungeremu, the Zimbabwe National Chamber of Commerce president,” We engaged the governor to make the (commercial) paper transferable

to other companies but the central bank chief hasn’t gotten back to us.

“According to the feedback we are getting from our members, they haven’t even received the commercial paper yet. It’s now very difficult for them to do business.”

He indicated that the companies will get the

commercial paper which will mature in 24 months and it earns an interest of 7.5% per annum which means for the duration from the day the announcement was made, owed firms are already three months behind

as far as the interest payments are concerned.

“We want to make sure that companies are not going to be prejudiced as they are owed the money despite the fact that the document has not come.”

The captains of the industry are hoping that the central bank will still honour the period that the companies have been waiting for the commercial paper.

Kamungeremu said the industry’s tolerance is currently running low.

“The governor made an appeal to us to make a bit of sacrifice for the purposes of stabilising ZiG and we said we are willing to carry part of the load to stabilise the economy.

“No wonder why, despite how difficult it is, we accepted that to be converted to commercial paper.

“Now we are saying what they promised us they should give us, may the commercial paper come,” Kamungeremu said.

He added: “This is why we then made a recommendation to the central bank that they make this document transferable without paying it off or creating extra liquidity.

“It must be transferable from one holder to the next so that if I am really under pressure, I have an option of selling it to you then you will give me the money and hold the paper till it matures. That is the

request that we have made.”

Oswell Binha, the board chairman of the CEO Africa Roundtable also said the RBZ was inconveniencing the business sector.

“We are yet to receive a commercial paper from the RBZ as none of our members have advised us on the issue.

“The fact that we are yet to receive the commercial paper for the money that has already been acquired by the central bank shows there is an administrative loophole on the part of the central bank,” Binha said.

He claimed that the delay will ruin the already vulnerable companies.

“The companies are already feeling the pinch as that money was supposed to be utilised for raw materials, equipment, machinery and working capital. This means the more the delay some will go down.

“The situation is dire and a serious and unnecessary inconvenience to the business,” he added.

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