Reserve Bank of Zimbabwe (RBZ) Deputy Governor Dr Jesimen Chipika has called for an increase in productivity across all economic sectors, and consequently exports, if the country is to overcome foreign currency shortages.
She said this while fielding questions during a panel discussion on the Transitional Stabilisation Programme (TSP) at the Institute of Chartered Secretaries and Administrators in Zimbabwe annual conference in Victoria Falls last week.
She said the high demand for forex, against limited supply due to low exports, was partly to blame for the fluctuating exchange rate.
“We need higher productivity in all sectors. We need more exports,” she said, adding that Zimbabwe lacked the financial support that other countries enjoyed from international financial institutions.
Speaking on cash shortages, Dr Chipika said fact that over 90 percent of transactions were now electronic was a good development.
Dr Chipika said the RBZ intended to provide banks with more cash, but would only do so gradually, and in exchange for RTGS balances in the banks to minimise inflationary effects.
She added that although cash was still needed for some small transactions, some depositors that queue at banks to access cash were doing so for speculative purposes.
United Refineries Limited chief executive officer Mr Busisa Moyo said the manufacturing sector is struggling as demand has waned significantly.
Mr Moyo said most factories were running at 50 to 60 percent of capacity utilisation. Due to a number of challenges confronting the economy, results of the manufacturing sector survey set to be released in November are expected to show that capacity for the year was between 40 to 50 percent.
Mr Moyo said there were supply problems due to low output, with farmers also not providing sufficient raw materials.
Manufacturers had the capacity to crush 400 000 tonnes of soya beans, but farmers were only producing 35 000 tonnes, less than 10 percent of the crushing capacity.
He said while industry appreciated the positive impact the 2 percent transactional tax was having on Government revenue, and that it was a way of taxing the informal sector, the tax was negatively affecting the formal sector which he argued was overtaxed.
He proposed that formal sector businesses be exempted from paying the tax. Mr Moyo said he hopes the benefits of the TSP would have started to trickle down to ordinary people by early next year. The TSP runs from October last year to December 2020 and is set to be replaced by a new five-year blueprint.