Zim industry engages banks

HARARE - The Confederation of Zimbabwe Industries (CZI) said it has engaged financial institutions over delays in foreign payments.

This comes as local industry has been struggling to import raw materials since late last year due to lack of foreign currency and banks’ delay in settling international financial obligations.

CZI president Busisa Moyo told journalists on Tuesday that although the international settling situation had improved from October, diminishing nostro account balances held by banks were frustrating industry’s ability to transact internationally and many businesses had failed to pay for imports.

“While I cannot tell you exactly how much has been lost in terms of financial value, I can rate the losses and lost opportunities as significant,” he said.

Market watchers, however, contend that transactions valued at over $1 billion have been stalled by the depletion of local bank’s nostro accounts.

A nostro account is a bank account held in a foreign country by a domestic bank mainly to facilitate settlement of exchange and trade transactions. Thus, when manufacturers make orders, their respective banks then have to pay the suppliers through the nostro account.

Industry, however, remains optimistic that a change in the country’s fortunes this year might help reduce the delays in foreign payments.

“The tobacco marketing season is about to start, this will definitely improve the situation and metal prices are expected to rise this year, so this may lead to the situation easing,” he said.

Bankers Association of Zimbabwe president Charity Jinya recently said a number of factors had culminated in the current foreign currency liquidity shortages.

She said these challenges had largely emanated from a continuing trade deficit, noting that any issuance of Treasury Bills would “continue to put pressure on the country’s ability to effect transfers outside the country”.

She said collective efforts were being made by various stakeholders to mitigate these challenges.

These measures included restriction of unnecessary imports applied by banks based on a priority list; a directive by the RBZ to reduce cash export thresholds for travellers; and the introduction of bond notes by the central bank, which she said was aimed at stimulating exports.

“Banks are also encouraging the use of electronic and digital payment platforms for all transactions and streamlining cash withdrawals to reduce pressure on their Nostro accounts. A combination of these measures, if supported by the market should improve nostro liquidity and reduce import payment cycle,” Jinya said.

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