THE Reserve Bank of Zimbabwe has granted the National
Railways of Zimbabwe permission to charge in foreign currency for goods
exported under the Cost, Insurance and Freight (CIF) conditions.
NRZ board chairman Advocate Martin Dinha said the approval
by the Central Bank for the rail entity to charge in foreign currency for goods
exported under CIF conditions would go a long way in enabling the parastatal to
repair its equipment and infrastructure.
“The authority to charge exporting customers in foreign currency
is a welcome and progressive development for the organisation. With this
approval NRZ can now approach its various exporting customers to inform and
familiarise them with this new development. While NRZ has traditionally been
collecting foreign currency from customers who are into export business, the
foreign currency generated from this source has not been enough to
requirements, though it assisted the organisation in repairing its rolling
stock and infrastructure,” he said.
Adv Dinha said charging in foreign currency would also
enable NRZ to improve its coffers to capacitate its business as well as procure
essential spare parts.
“The intervention by the Central Bank is critical for NRZ
considering that foreign currency has been essential in funding the
organisation in hiring wagons and locomotives from the region to address
resource and capacity gaps, hire inter-change, as well as procuring spares and
accessories for wagons, locomotives and infrastructure maintenance. And at this
juncture, the need for foreign currency for the organisation has become huge
and urgent especially to hire locomotives and wagons for the movement of
imported grains, to alleviate drought-induced shortfalls, among communities in
Zimbabwe,” he said.
The approval for NRZ to charge in foreign currency came
after the rail entity’s appeal to the Central Bank and the Ministry of Finance
and Economic Development last year. NRZ submitted an appeal to RBZ seeking
permission to be allowed to charge all exporters for railage in foreign
currency. In its response to NRZ dated 31 December 2019, the Central Bank
agreed in principle for the company to charge railage collection under the CIF
basis.
“Please kindly note that in terms of the current Exchange
Control administrative arrangements, where a transporter has shipped goods
under the Cost, Insurance and Freight (CIF) basis; the respective transport or
railage portion may be received by the transporter in foreign currency. Under
the circumstances highlighted, National Railways of Zimbabwe may receive such
portion of railage charges in foreign currency. Kindly, therefore, submit a
specific application through your Authorised Dealers to have the necessary
Exchange Control administrative structure for this arrangement to be
operationalised”, read the RBZ response.
However, the move to allow NRZ to charge in foreign
currency has been viewed by captains of industry as likely to compromise
players in various sectors of the economy. Confederation of Zimbabwe Industries
vice-president Mr Joseph Gunda said allowing NRZ to charge in foreign currency
was unfair since businesses are only allowed to trade in local currency on the
local market.
“The challenge we have is that, if NRZ is allowed to charge
in foreign currency, it means we have to get the foreign currency ourselves. It
seems there is now a contradiction here, so are we now saying companies are
trading in foreign currency?” he exclaimed.
Mr Gunda said it was important to note that the
manufacturing sector imports most of its raw materials using foreign currency,
which is scarce in the country and ought to be put in good use to enhance
productivity.
“We are now being forced to compromise the amount of
foreign currency we get. Instead of us buying raw material we are now forced to
use that money to pay current expenditure like working capital. I don’t see
that benefiting the economy. If you allow NRZ to charge in foreign currency we
might as well allow everybody because it compromises others. It means industry
is being squeezed because with the foreign currency we get through the
interbank market to buy raw material, we are being forced to pay NRZ,” he said.
Mr Gunda said there was a need for wider consultation to be
done before allowing NRZ to charge in foreign currency.
Association for Business in Zimbabwe (Abuz) chief executive
officer Mr Victor Nyoni said industry has noted with concern the use of foreign
currency in transacting by certain sections of the economy.
“As the industry we have been complaining that some
sections of our economy are dollarising and our attitude is that anything that
comes from authorities particularly the Government, that gives a sort of an
impression that foreign currency is the right currency to deal in, it gives the
impetus to the whole economy that people should shun our local currency,” he
said. Sunday News
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