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Zimbabwe: Forex Auction System Bears Fruit for SMEs

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The Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction system has yielded positive results for small firms, with a local start-up saying it is now on an expansion drive on the back of the new impetus from improved access to forex.

The foreign currency auction system has largely been credited with bringing about economic and price stability into the market following previous waves of price distortions due to exchange rate volatility.

Apart from the main auction for large firms, the RBZ created an alternative platform for the Small to Medium Enterprises (SMEs) in August with a view to boost their access to foreign currency and thus boost their operations.

A leading player in the motor industry, Benz-Elect, which operates a local dealership and service workshop under licence from Mercedes Benz has reaped immediate benefits from the auction.

The positive impact is in tandem with the Government’s economic thrust, which aims, among other things, to roll out strategies to grow SMEs into large corporates which can have a bigger foothold on the local market.

In an interview, Benz-Elect chief executive officer Dr Victor Sibanda said his company’s operations, most of which are anchored on the importation of service kits, have improved tremendously since the introduction of the auction system.

“For us the small guys it’s not easy to operate and the previous fluctuations in the local currency made things worse for us,” said Dr Sibanda.