The Confederation of Zimbabwe Industries (CZI) yesterday told Parliament that the country’s foreign currency auction system was problematic, resulting in a huge backlog.
These remarks were said by CZI president, Kurai Matsheza while giving oral evidence before the Parliamentary Portfolio Committee on Budget and Finance on the new monetary policy measures on Monday. Mtsheza said:
When it experienced challenges we continued to engage authorities in terms of what we felt were things that were not being done properly, saying that they should be strengthened.
From time-to-time backlogs were building up, but from our membership we never got to a point where we had 100% clearance of those backlogs. As we speak we have got backlogs. A lot of other people also participate on that platform, but on our side we can confirm that the backlogs still exist and bids from as far as January have not been settled, which is worrisome.
In terms of price discovery, we also felt that it was not a true pricing mechanism. We felt the principles of a Dutch auction system were not followed, and as a result we realised that we get prorated.
Matsheza added that initially, they were told that the auction system would settle payments within two days.
The forex backlog is regarded as one of the major factors driving the exchange rate up as businesses are forced to buy foreign currency on the black market.