In Zimbabwe there is a requirement exporters change 25% of their dollars in the local currency has impacted the growth of the horticulture industry. This follows a period of declining growth following the reforms to land in the past two decades. It has made strides towards regaining its exports of horticulture that had reached an all-time record of $140 million in 1999. However, they were severely damaged through the land seizure program that were initiated by ex-President Robert Mugabe. Recent investments have resulted in an increase in exports which now exceed $100 million per year and a significant rise in the demand for goods such as macadamia and blueberries.

But, the Horticultural Development Council (HDC) in Zimbabwe states that the country’s expansion is constrained due to specific policies, such as the exchange rate rule as well as excessive borrowing costs. Exporters have to exchange 25 percent of their earnings from foreign sources with an official rate that is considered as overvalued. This can result in losses for the financial sector compared to the rates of black markets. Although Zimbabwe is reintroducing local currency in 2019 following the abandonment of the currency in 2009 because of inflation, Zimbabwe is still primarily using in the U.S. dollar for formal transactions. This has led to volatility in the local currency’s value.

Linda Nielsen, CEO of the HDC She emphasized the negative consequences of this policy for the cost of production and competition in the sector. She called on the government to give tax breaks to farmers in order to boost growth and reach the lofty goal of exporting $1 billion before 2030. Nielsen pointed out Zimbabwe’s potential on the world market for blueberries, but warns that economic policies that are not favorable might hinder the ability of Zimbabwe to take advantage of this chance.

Source: Reuters