Zim’s Forex Auction System Backlog Chokes Pharmaceutical Operations

DELAYS in the disbursement of foreign currency by the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction system is threatening the existence of Zimbabwe’s pharmaceutical sector amidst indications that pharmaceutical operators are in some instances going for two and half months without getting any disbursement from the auction system.

By Michael Gwarisa

Zimbabwe adopted the Dutch Foreign Exchange System in June 2020 whereby business can access foreign currency at an RBZ set exchange rate in a move that was meant to stabilize and tame the peripatetic parallel market rate.

Speaking during a Retail Pharmacists Conference in the capital Harare, Zimbabwe’s top retail and wholesale pharmacist and health economist, Ms Nyasha Bandason said logistical and funding issues were at the center of woes bedeviling the pharmaceutical supply chain system.

Sometimes the bottlenecks that we do face is just in terms of logistics in terms of clearing the products. Logistical costs have also gone up and there is also an increase in compliance level when it comes to the logistics side which also makes it challenging to operate.

“A big issue that we have whether as wholesalers, manufactures and others is that of funding. Funding becomes a central part in a big way in our business. For a lot of us wholesalers, we are constantly finding challenges in terms of access to funds. This includes our auction system. Even when you go to the auction system, payments are being processed after about 10 weeks and 10 weeks is very long time and a business cannot afford to wait that long,” said Ms Bandason.

Some of the delegates at the Retail Pharmacists Conference

She added that delays in disbursement of funds by the forex system also translates to delays in getting new pharmaceutical products into the country and in most cases, new products are now taking between four to six months to get into the country despite the growing local demand.

Zimbabwe currently imports majority of its pharmaceutical products and they are 2336 pharmaceutical products currently registered in the Zimbabwean market. Over the past few years, there has been an increase in products registered for anti-effectives, cancer and cardio vascular drugs. A total 103 products have so far been registered this year alone.

Another leading Retail Pharmacist, Mr George Nyamayaro said the absence of foreign
currency and the delays by the RBZ to make payments have pushed them to source 
expensive Forex on the black market because they need to restock.

“We need stock so sometimes we find that as retail pharmacies, we are then forced to source the forex somewhere else. When we do that, it then means we have a higher cost of sales when we get the money that route. I know that the RBZ will be overwhelmed because other sectors also need the same funds,” said Nyamayaro.

Deputy Director Economic Policy and Research Division, Dr Nebson Mupunga

Meanwhile, Deputy Director Economic Policy and Research Division, Dr Nebson Mupunga who was standing in for RBZ Governor, Dr John Mangudya at the event said the central bank was currently seized with the backlog matter and plans to clear the logjam were at an advanced stage.

“The issue of the backlog was addressed in our recent Monetary Policy Committee (MPC) resolutions where it was stated and indicated to the market that the bank is aware of the Foreign Currency backlog of around US$175 Million and MPC directed the bank to clear the backlog within a month. I think this is being addressed and going forward the NPC also directed that there should not be any backlog so it’s something that is being addressed,” said Dr Mupunga.

He added that the pharmaceutical sector in Zimbabwe currently contributes around 0.39% which less than 1% to the Gross Domestic Product (GDP). The contribution by the pharmaceutical sector is in two fronts namely through manufacturing and through the retail and distribution. However, the contribution of manufacturing is 0.1% hence the high reliance on imported pharmaceutical products.

 

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