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Nqobile Bhebhe, Senior Business Reporter
THE Bulawayo Chamber of Small to Medium Scale Enterprises says the call to suspend the Small Medium Enterprise (SMEs) foreign currency auction segment would cripple the growth of the sector and slow down the country’s economic recovery.

Following the introduction of the forex auction platform by the Reserve Bank of Zimbabwe (RBZ) on June 2020, authorities saw it fit to cater for small business funding demands by adding the SMEs auction.

Reserve Bank of Zimbabwe

The intervention was meant to enhance financial inclusion as well as dissuade businesses from turning to the parallel market in search of foreign exchange for essential imports.

In March this year, the RBZ reported that since 2020, a total of 2 371 beneficiaries shared US$32,2 million under the SMEs foreign exchange auction.

On the first day of SMEs auction trading, about US$460 167 was allotted.

Just like the main auction, the bulk of the funds was allotted for raw materials as well as equipment purchase.

However, on Monday the Zimbabwe National Chamber of Commerce (ZNCC) advocated for the suspension of the auction system suggesting that one foreign currency auction must be operational.

“The SMEs auction should be suspended and only have one auction market to serve all with a liberal approach,” said ZNCC.

“The forex auction system currently in place is mainly serving as a foreign currency allocation mechanism through the priority list which is depriving other market players’ access to the price discovery platform.

“In the current setup, facilitating the participation of the majority of businesses on the auction is expected to enhance ownership and buy-in from all economic agents,” it added.

However, Bulawayo SMEs programme coordinator, Mr Nketha Mangoye Dlamini, in response said suspending the facility would hurt SMEs.

He stated that the main reason for setting up of SMEs auction platform was to address specific operations issues affecting the sector without bundling them with big corporates.

“If you now eliminate the auction system, there is a strong likelihood of marginalising the sector,” said Mr Dlamini.

“The bigger corporations would drown the SMEs and exclude them.

ZNCC should look back and recall why the bourse was set up for SMEs. You can advocate for SMEs removal only if there is a negative effect generated by the bourse.”

Mr Dlamini said there is a genuine need for SMEs to access foreign currency to finance operations, which justifies the existence of the SMEs forex trading platform.

Under the National Development Strategy 1 (NDS1), which guides the country’s development between 2021 to 2025, unlocking the potential of SMEs is one of the critical steps toward fostering inclusive economic transformation.

— @nqobilebhebhe