Saturday, 26 October 2019

WE WILL STABILISE PRICES : GOVT


Government has identified 14 basic commodities for instant measures aimed at fostering price stability to cushion citizens from incessant price increases, a senior Government official has said.

It also emerged last week that the Confederation of Zimbabwe Retailers (CZR) met President Mnangagwa a fortnight ago to apprise him on the situation regarding product supply, the galloping prices and challenges facing businesses.

CZR says the President showed knowledge of the dynamics in the economy, but was particularly not pleased with monopolies in the production of basic commodities and reportedly revealed Government had a robust plan to break the monopolies for healthy competition. 

These developments come against the backdrop of the wave of frequent price increases, since the onset of ongoing economic reforms in September last year to realign key economic fundamentals for inclusive, faster and sustainable economic growth.

Against this background, inflation has let loose, sky-rocketing from a lowly 5,39 percent in September 2018 to a staggering 175,5 percent by June this year, as prices show little signs of stabilising.

In the intervening period, especially after onset of currency reforms that saw introduction of a liberal exchange rate and interbank market, prices have  tracked changes in exchange rates, which has shifted from US$1 to $2,5 in February to US$1 to $15,5 currently.

This trend has partly been attributed to high demand for foreign currency needed to import finished goods or raw materials amid little domestic industrial and agricultural production. But certain pricing models portray profiteering and greedy tendencies. Prior to liberalisation of the exchange rate and interbank market, Zimbabwe had since February 2009 used a basket of currencies, largely dominated by the US dollar, as the transaction currency and unit of account. Zimbabwe reintroduced local currency in February this year. 

Secretary for Industry and Commerce Dr Mavis Sibanda, said meetings were ongoing with industry and commerce to understand the challenges they are facing and factors driving relentless price increases.

A paper will then be compiled detailing issues industry would have outlined, which will be presented to President Mnangagwa for his consideration and possible interventions.

However, Dr Sibanda said Government felt there was no justification for the magnitude and frequency of price increases happening in the country, which pointed to attempts to force the State’s hand on price controls so that basic goods disappear from the market.

“That is a cause of concern to us as a ministry; we are not even sleeping because we do not understand what is happening and we are trying to find means and measures to stop this.

“We also think this is generated by people with ulterior motives because there is definitely no reason why (for example) if the price of fuel goes up by one cent, the price of Mazoe goes up by $10. Honestly, if one cent can be equated to $10 or $15 then there is something wrong. I personally believe some of these people are trying hard to push Government to put price controls, I think this is the intention that Government should put price controls so that goods disappear from the market.

“We will work with the business community to see how best we can change this. It is unfortunate that the people we talk to (and) have meetings with and seem to agree, toti tabvumirana, but tomorrow we see something different from what we would have agreed on,” she said. 

Dr Sibanda said Government, through her ministry would not give up on efforts to ensure sanity is restored in pricing models, adding that they have not conceded defeat. She expressed confidence that Government will eventually triumph on the issue.

“We are working hard; we are meeting with the bread people; all basic commodities; 14 basic commodities. Those are the ones which we are really worried about. Things like sugar, bread, mealie-meal, cooking oil; those are the things which we are really worried about as well as seed and fertiliser. We are also working on a paper which we are going to give to His Excellence, The President to say, ‘What are the people saying? To tell the truth as much as possible to say ‘What are the business people saying?’ We all want to get this thing (of prices increases) to a conclusion, we cannot allow it,” she said.

Dr Sibanda was speaking during a meeting with the Norton Business Alliance members, which included giant farm implements maker Hastt Zimbabwe, automotive lead acid battery maker Central African Batteries, leading cooking oil manufacturer Cangrow Trading and Non-ferrous Metal Works Zimbabwe to appreciate their challenges.

The meeting was held ahead of a scheduled visit by Industry and Commerce Minister Mangaliso Ndlovu to also appreciate challenges businesses in the area are facing, which include acute shortage of power and key raw materials. CZR president Denford Mutashu said they met with President Mnangagwa just over a week ago to apprise him on the issues and challenges businesses are facing and unravel underlying causes of price instability in the economy.

“Ours was quite an open and incisive meeting where we apprised His Excellence on the state of basic commodities supply and pricing. The President was quite informed on pricing and supply issues on products like bread where he gave us thought-provoking insights, which we have already started working on as a sector. The President highlighted his dismay concerning monopolies that have a stranglehold on the economy and that Government has a robust plan to untangle these and usher competition in the production of basic goods,” he said. Sunday Mail

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