The horticultural sector praises currency retention, but . . .

the herald

Nelson Gahadza –Senior Business Journalist

The Horticultural Development Council (HDC) hailed the 100% retention on the extra portion of export earnings as good for the industry.

However, he pointed out that the provision largely benefits new exporters who do not have a revenue base set by the Reserve Bank of Zimbabwe (RBZ).

Central Bank Governor Dr John Mangudya announced in his Monetary Policy Statement (MPS) earlier this month the increase in the retention threshold for horticulture to 100% from the 80% threshold .

However, HDC chief executive Linda Nielsen said the RBZ has established a baseline for each existing exporter at a certain amount of US dollars per month.

“Additional exports refer to earnings above the baseline set by the RBZ only. Any earnings below the baseline still attract 40% liquidation.

“Also, the additional export incentive is not applied immediately, but the exporter is required to complete a form at the end of the month and claim the benefit. We hope it will be effective but we have doubts,” she said.

She said some existing exporters have had their base set at unachievable levels, meaning they will never benefit from the policy.

“Exporters are wondering about the basis for setting the threshold. This policy is not going to encourage growth and, in fact, horticultural producers feel they have been disadvantaged compared to other sectors.

“They would have been much happier with a linear 80% retention system,” she said.

Ms Nielsen said the export section of the horticulture industry had been hit hard during Covid-19 with incredibly high freight rates not expected to return to pre-Covid-19 levels anytime soon.

She noted that the discrepancy between the official rate and the rate used by suppliers to charge for all inputs, including seeds, fertilizers, chemicals, packaging, fuel, cleaning chemicals, equipment and equipment through services such as transportation, is extremely important and in most cases 80-100% damage to the primary producer.

“In some value chains, this has actually eroded margins to the point that it is not profitable to export. Unfortunately, the industry cannot afford this ‘taxation,'” she said. .

She added that some members tried to access money on the big currency auction, but since everyone is still waiting for funds from the December auction, not to mention the bids won in January and February.

HDC CEO said no growing business or seasonal business could withstand this pressure on cash flow and some of the small growers are choosing to abandon or reduce export crops and focus on growing crops local provided in Mbare.

Ms Nielsen said the government should work to reduce the disparity in exchange rates between the auction and the market rate, which would then solve the problem of export retention, which is the main deterrent for the industry. horticultural.

“This is having a serious effect on the current horticultural season, which will see an 18% drop in pea production. A reduction in the retention rate would create local and foreign investment in the sector,” she said.

She noted that the sector also needs security for long-term investments, for example the citrus industry is a 60-year-old industry. Thus, to achieve the growth target of 30% per year, investor confidence must be restored to attract the patient capital required. .

“The government should work with the private sector to attract affordable, low-interest, long-term finance,” she said.

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