By Alois Vinga
RESERVE Bank of Zimbabwe (RBZ) Auction this week allotted US$20,7 million with ZWL slightly weakening amid calls by industry for the government to also investigate its small suppliers amid indications they are fuelling the parallel market.
An update released at the close of trading this week shows that a total 295 bids were allotted on the SME Auction which received a total US$1,7 million with a huge chunk going towards supporting raw materials , machinery and equipment needs.
On the Main Auction platform, a total US$19 million was allotted with raw materials receiving US$9,5 million, machinery and equipment US$2,7 million.
This week also saw the official rate slightly waning to US$1: ZWL 1 021 down from US$1: ZWL1 000 recoded last week signifying a 2,1% decline.
On the alternative market, exchange rates have spiralled much faster and currently ranging around US$1:ZWL 1 500 as the widely accessible premium amid market reports that some dealers have already pegged it to a high of US$1: ZWL2 000.
Authorities have since called for calm in the markets, maintaining the current turbulent wave will soon subside.
But a Confederation Zimbabwe Industries (CZI) business environment insight has called on authorities not to just place focus on big government contractors and other factors as the drivers of parallel market rates but to also focus on suppliers of general services and goods.
The observation comes in the wake of evidence showing that big contractors are offloading their ZWL payments on the parallel market where they are purchasing US$.
“It turns out those even suppliers of general consumption goods and services for government also tended to drive the parallel market rates.
“A simple calculation of the correlation coefficients between the parallel market and the two sources of government procurement confirms that although it was not a very serious concern in 2020 and 2021, the correlation was too high in 2022,” said CZI.
The industry lobby group said while government has instituted measures to minimise the damage, such as instituting a value for money policy where there is increased scrutiny on the invoices, if a huge parallel market premium remains in place, it will be inevitable for government contractors to convert their money into USD at the parallel market to preserve value.
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