By 
The foreign currency auction system that was introduced by the Reserve Bank of Zimbabwe (RBZ) in June this year has given birth to grey imports which are set to undermine its sustainability in the near future.
By Pellagia Mupurwa
Grey imports or parallel import refers to legal importation of goods and services from another country through channels other than the maker’s official distribution system.
The synonymous term parallel import is sometimes substituted.
This system forms a parallel distribution channel for buying and selling of goods creating two different prices for the same products in the same market.
According to Former Finance Minister Tendai Biti, the auction system is just a myth that is only affecting 10 percent of businesses as 90 percent of businesses are avoiding the auction system resulting in the growth of grey imports.
“Grey imports are increasing which means that the volumes of foreign currency operating outside the auction are huge, creating a scenario of forex supply and demand mismatch,”
“90 percent of the companies are not getting their foreign currency from the auction system, they are getting their foreign currency from offshore tradings where companies trade with each other outside the forex auction systems hence the volume of foreign currency operating the outside banking system are huge,”
He further added that major exporters, including some medium to large gold mines, have stayed away from rigged auction system where they will sell their product at 80 cents when they can sell at $105, they will not accept an overpriced 1:81 rate that’s why the parallel market is still kicking.
“Because in parallel marketing the goods have different prices it confuses the consumer. The authorized dealers sell genuine products at a higher cost whereas the grey marketers sell the same original and legal products at a lower rate than the market. Hence there are price differences for one single product developed by the same manufacturer, “he said
Biti also argued that Reserve Bank of Zimbabwe should create a proper auction system where exporters would sell their currency with the RBZ being the regulator not the player and also go back to the regime of multiple currency.
“The government has only released $240 million between June and October that’s nothing compared to country’s demands, we need $2 billion to use imports spent on fuel, food, drug and electricity. It means there is market out there which is irrespective of the auction system,” he said.
Comments