Government’s Forex Allocation: A Necessary Short-Term Measure

Minister of Trade and Industry, Sosten Gwengwe, has announced that the government will provide foreign exchange to importers dealing in essential goods such as maize flour, chicken feed, second-hand clothes, and baking flour.

This intervention aims to ensure that these traders access forex at official exchange rates, thereby helping to stabilize and reduce commodity prices.

By making forex available to key importers, the government is addressing the root cause of price hikes—high import costs driven by reliance on the black market, where forex is sold at exorbitant rates. Importers benefiting from this initiative will be required to commit to lowering prices, ensuring that consumers experience direct relief.

While Gwengwe acknowledges that the country is facing an economic crisis, this measure is a pragmatic short-term solution. It helps suppress the black-market forex trade, which has been fueling inflation, and provides immediate relief to consumers by making essential goods more affordable.

Although this is not a long-term fix, it buys time for broader economic reforms to take effect. In the short run, ensuring a controlled and fair forex distribution can ease inflationary pressures, protect vulnerable populations, and maintain market stability.