‘Local production can save foreign currency’

MAIZE and wheat, Zimbabwe’s staple grains, account for over half of the foreign currency that corporate entities require for key raw material imports, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya says.

This means the country is spending millions of United States dollars that are in short supply to import grains the country should ordinarily be producing enough internally, given its good climate and swathes of fertile arable land.

Zimbabwe’s economy is reeling from the serious negative impact of foreign currency shortage manifesting through exchange rate volatility because of the huge national demand for foreign currency caused by over dependence on imports.

“The Reserve Bank has been very clear (though); we have bemoaned the lack of productivity in this country; we have no productivity; that is the problem; it’s not foreign currency.

“We do not produce to self-sustain ourselves. How do we import maize and wheat in this day and age? The RBZ continues to bemoan lack of productivity to self-sustain ourselves so that the foreign currency we are using to import maize and wheat is used to feed the auction system.

“We need 30 000 tonnes of wheat in this country every month. That is about US$12 million, which we are removing from the auction; and for maize, we need about 100 000 tonnes per month; that is about US$28 million, which we are again removing from the auction.

“So you can see already that more than half the companies’ forex requirements per month go to import basic food commodities in the form of grains and therefore you want to reduce that to put money on the auction,” Dr Mangudya said.

The shortage of foreign currency has been the major factor driving exchange rate volatility that has seen inflation hit a post dollarisation high of 785,6 from very low levels that saw Zimbabwe experience deflation in February 2014.

Although drought and natural disasters over the last two years have been major factors behind constrained agricultural production, Zimbabwe faces perennial food insecurity due to limited use of its water resources in the form of dams.

Despite being landlocked, Zimbabwe accounts for approximately 60 percent of the dammed water found in the Sadc region.

The Government is, however, intensifying efforts to boost agricultural production through conservation agriculture methods (also known as Pfumvudza) to guarantee food self-sufficiency and to also commercialise smallholder agriculture.

Additionally, Government has made efforts to boost large scale farm productivity through the multimillion-dollar farm mechanisation programme that will see the importation of farm equipment under the Belarus, John Deere, and Pedstock facilities.

This means that weekly foreign currency trades that have averaged US$14 million to US$18 million since the auction system was introduced will be allocated to other critical imports such as fuel and drugs that the country has no capacity to produce.–chronicle.co.zw

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