Forex rule hampers Zimbabwe's horticulture recovery

Linda Nielsen, Chief Executive Officer of Horticultural Development Council attends an exclusive interview with Reuters in Harare, Zimbabwe, August 28, 2024. REUTERS/Philimon Bulawayo

Under the rule, exporters exchange 25% of their earnings for local currency at what critics say is an overvalued official rate, leading to losses in terms of a black market rate that is widely used in the economy.

Zimbabwe still uses the U.S. dollar in formal transactions after ditching its own currency in 2009 amid hyperinflation. Local currencies reintroduced since 2019 have been volatile.

"It is like a double taxation because that money is changed into local currency, but all the costs of the produce are in US dollars. The (production) costs are even higher than our neighbours," HDC CEO Linda Nielsen told Reuters.

The government should, instead, give farmers tax incentives to help the sector grow and meet its ambitious target for $1 billion of exports by 2030, she said.

Zimbabwe is one of the fastest-growing blueberry producers globally, but the HDC says the country risks missing out on opportunities due to unfavourable economic conditions.

"We have a real opportunity for growth, but we don’t have the patient capital that is required for that growth," Nielsen said.

"The funding that was available through commercial banks is very short-term and perennial plantation crops don’t suit that funding," she added.