In an ambitious bid to revitalize the country’s industrial sector, the Reserve Bank of Zimbabwe’s (RBZ) auction system has emerged as a game-changer, injecting new life into the economy. The initiative has elicited encouraging responses from the Confederation of Zimbabwe Industries (CZI) and other stakeholders, signaling a positive shift in the manufacturing landscape.
The CZI revealed that businesses benefiting from the RBZ auction system have reported significant improvements in capacity, product supply, operational efficiencies, and financial performance. This development paints a promising picture for the country’s economic resurgence.
A recent update from the RBZ confirmed that the cumulative foreign exchange auction allotments, since the inception of the Foreign Exchange Auction System in June 2020, have reached a substantial US$4.121 billion as of December 2023. These funds have predominantly been channeled towards procuring raw materials, machinery, and equipment, underpinning a surge in manufacturing productivity.
Kurai Matsheza, the president of CZI, emphasized the instrumental role of the auction system in driving local product supply and fostering investments in capacity. He observed a notable increase in domestically produced goods, reflecting the industry’s reliance on funds obtained through the auction.
The Dutch auction system, launched by the RBZ in June 2020, was designed to introduce transparency and efficiency in foreign currency trading within Zimbabwe’s economy. Moreover, it serves as a crucial mechanism for price discovery of the local currency and facilitates the provision of foreign currency essential for procuring raw materials and retooling.
Looking ahead, the Government’s Industrial Development Policy (IDP) (2024-2030) aspires to propel manufacturing growth, increase sector investment, boost manufactured exports, and escalate the share of manufacturing employment by 2030. These targets align with the broader vision for economic rejuvenation.
Despite operational challenges such as prolonged power outages, the manufacturing industry witnessed a modest 2.2 percent growth in 2023, signaling resilience amidst adversities. Sectors like paper, printing, publishing, as well as non-metallic mineral products and chemical and petroleum products, experienced notable expansion, laying the foundation for sustained progress.
The 2024 National Budget report highlighted steady advancements in volume and capacity utilization within the manufacturing sector, fueled by increased access to foreign currency through the auction system, enhanced agricultural throughput, heightened investment levels, and augmented market opportunities.
As Zimbabwe lays the groundwork for its National Industrial Policy, which will guide industrialization efforts through 2030, the focus remains on structural economic transformation, fostering innovation, and harnessing opportunities within the African Continental Free Trade Area (AfCFTA). This forward-looking approach signals a concerted effort to drive inclusive and sustainable economic growth.
With December 2023 auction reports indicating substantial allotments and a decline in the parallel market premium, the impact of RBZ’s auction system on economic stability and growth is increasingly evident.
As the country steers towards a new era of industrial revitalization, the RBZ auction system stands at the forefront of fostering resilience, innovation, and prosperity, ushering in a promising future for Zimbabwe’s industrial landscape.
