The Reserve Bank of Zimbabwe (RBZ) is mulling plans to stop allocating foreign currency to cooking oil manufacturers to force them to acquire raw materials locally.
The plan comes as the economy is battling a debilitating foreign currency shortage that has seen the parallel market thriving.
RBZ now wants the sector to get the raw materials locally by funding the production of soya beans, sunflower and cotton seed.
“We have distributed foreign exchange from our major five products to cooking oil,” he said.
“By the way, cooking oil producers now need to wake up and smell the coffee; they can’t continue importing crude oil, this is September. They need to put their act in order.
“Produce soya beans in Zimbabwe; convert it into cooking oil, stock feed and export. We import crude oil.
“They now need to wake up. They have enjoyed Zimbabwean foreign exchange and yet they don’t produce.”
Mangudya said cooking oil producers can utilise money in real time gross settlement (RTGS) balances to support the sunflower, cotton and soya beans value chain.
“Their companies are now there and they should produce sunflower, cotton, soya beans that are used to produce oil, which we call value chains,” he added.
“The money is there for them so we now use those RTGS balances to produce soya beans.”
However, Oil Expressers Association of Zimbabwe president Busisa Moyo said government needed to deal with bottle necks that militate against the production of the required soya beans in the country.
“We are the ones requesting support from government. We are saying we need to localise the value chain but the problem is about the land tenure, land required and financing,” he said.
“The issue is to get financial support. This is why we are asking the government to assist. We don’t have the balance sheet to fund our production.”
Oil expressers need at least 150 000 tonnes of soya beans per year to substitute the importation of crude oil.
Cooking oil producing firms in Zimbabwe include United Refineries, ETG Parrogate, Surface Investments, Olivine and Willowton.
In 2016, Zimbabwe imported crude soya bean oil worth $119,9 million.
Mangudya lashed out at oil producers for increasing the price of cooking oil at a time they were getting foreign currency through official channels.
Some local manufacturing companies who are not on RBZ’s import priority list have been shoring up prices of their finished products, blaming it on the high cost of acquiring foreign exchange on the parallel market.
Oil producers have a capacity to supply 12 000 tonnes of cooking oil per month to meet the loca demand of 10 000 tonnes.
“Now some people in the cooking oil industry increase the price for cooking oil yet they are getting foreign currency at the official exchange rate,” Mangudya said.
“They are pricing their products using the price of the parallel market, where they never go.”
While RBZ is expected to soon start drawing down the $600 million nostro stabilisation facility expected to stabilise foreign currency situation, the amount is not sufficient to offset the foreign payment backlog as well as current needs.
Mangudya implored companies to continue exporting so as to generate the much-needed foreign currency.
“So we are saying if you are in security, provide security services in Mozambique, Zambia and even go beyond the region Sadc and Comesa,” he said.
“Don’t think Zimbabwe as your market only. We are saying think exports. We are providing you with an export incentive scheme.
“We are also providing an export support scheme. People who are exporting are quiet but those who are not exporting are making a lot of noise.”