By Alois Vinga
Listed tobacco processor, British American Tobacco (BAT) says the gaping difference between Zimbabwe’s interbank and parallel market exchange rates was choking the smooth flow of trade which has further been strained by the Covid-19 pandemic.
Speaking Friday, BAT company secretary, Pauline Kadembo said the issues around foreign currency exchange continue to complicate trade.
“The trading environment continued to be challenging, characterised by the lack of foreign currency for imports as well as the widening gap between the interbank rates and the parallel rates.
“Annual inflation was 676.4% in March 2020,” she said.
The remarks come at a time when the Reserve Bank of Zimbabwe governor, John Mangudya has been implementing robust strategies to clampdown illegal foreign currency deals.
The initiatives have seen the mobile money transfer platforms being slapped with stringent deposit limits, a fresh demand of agent line owners’ details.
Similar measures have also been placed on the ZIPIT platform and subsequently the rates have gone down from a high of US$1 for $75 Zimbabwean dollars to around 1:50 on the parallel market.
However, the bank rate continues remains transfixed on a less inspiring 1:25 against, a figure which has prompted most companies to cry foul over loss of value.
Meanwhile, BAT recorded a 10 % increase in volumes, compared to the same period last year, driven by various efficiencies from the new trade marketing tools that are being used by the company during the first quarter of 2020.
Turnover, on a historical cost basis, increased by 703% compared to the same period last year, driven by price increases which were taken to manage the inflationary pressures faced by the company.
The company also commenced cut rag exports in March 2020 to assist in foreign currency generation.
Added Kadembo, “The economic environment is expected to remain challenging and the impact of Covid-19 will be evident in the second quarter.
“The business expects a drop in volumes in the second quarter due to trading for a few days in April 2020 and reduced operations in May 2020.”