In Zimbabwe, the requirement for exporters to convert 25% of their dollar revenue into the local currency is impacting the revival of the horticulture sector. This comes after a period of decline following land reforms two decades ago. The country has been on a path to recover its horticultural exports, which had reached a high of $140 million in 1999 but were disrupted by the land seizures initiated by the former President Robert Mugabe. Recent investments have led to a resurgence in exports, now exceeding $100 million annually, with a notable increase in demand for products like blueberries and macadamia nuts.
However, the Horticultural Development Council (HDC) in Zimbabwe points out that growth is being constrained by certain policies, including the currency exchange rule and high borrowing costs. Exporters are required to swap 25% of their foreign earnings at an official rate considered overvalued, resulting in financial losses compared to the black market rates. Despite reintroducing local currencies in 2019 after abandoning its currency in 2009 due to hyperinflation, Zimbabwe continues to predominantly use the U.S. dollar for formal transactions, leading to instability in local currency value.
Linda Nielsen, CEO of the HDC, emphasized the adverse effects of this policy on the sector's costs and competitiveness. She advocated for the government to offer tax incentives to farmers to support growth and achieve the ambitious export target of $1 billion by 2030. Nielsen highlighted Zimbabwe's potential in the global blueberry market but warned that unfavorable economic policies could hinder the country's ability to capitalize on this opportunity.
Source: Reuters