THE prices of basic commodities have risen sharply since
elections held on July 30 to levels that are too high for a dollarised economy.
The bout of inflation is blamed on excessive government
spending and a critical shortage of foreign currency to procure imports and to
stabilise bond notes, which have since been devalued by up to 80% on the
parallel market.
President Emmerson Mnangagwa, who is in China for the Forum
on China-Africa Co-operation (Focac), is seeking a $2 billion bailout to ease
the crisis of foreign currency liquidity and cash.
The shortage of bond notes also appears to have worsened on
the formal market, despite new, crisp notes being found on the parallel one.
Yesterday, stakeholders blamed the crisis on Mnangagwa’s
failure to address “legitimacy” issues and non-appointment of a Cabinet, thus
leaving the country on auto-pilot.
Zanu PF legal secretary Munyaradzi Paul Mangwana admitted
that the ruling party was equally worried over the trend, adding there were
engagements behind the scenes to deal with the economic slump even in the
absence of Cabinet.
“We obviously are not happy if the prices are going up, we
are not happy at all … it doesn’t mean that when there is no Cabinet, there is
no government. Permanent secretaries are there, ministries are there,” he said.
Mangwana said Mnangagwa could not appoint a Cabinet before
Parliament was sworn-in, but could also not miss Focac, a platform for him to
structure deals that have the potential to revive the ailing economy.
“The President appoints ministers from Members of
Parliament and no single Member of Parliament has been sworn-in and they are
all parliamentary-elect right now … Zimbabweans should be patient,” he said.
Mangwana said government would, upon his return this week,
talk to industrialists to appreciate the cause of the price hikes in the past
few months and then seek solutions to the massive problems.
“Obviously, government will act, but the first stance is
persuasion, talk to industrialists and find out why prices are going up. We
would like the process to be stable,” he said.
But MDC Alliance secretary-general Douglas Mwonzora said
“darker days” were in the offing for Zimbabwe, following a disputed election,
calling on Zanu PF to move quickly to address its legitimacy issues.
“We are headed for an economic catastrophe. The prices of
basic commodities have shot up and there are massive job losses looming. It shows
that Zanu PF is not the answer to the current economic quagmire we find
ourselves in. It is important to redress certain fundamental issues, including
the chronic issue of legitimacy and respect of the people’s will,” he said.
Mwonzora took potshots at Mnangagwa, accusing him of flying
out of the country for Focac before appointing a Cabinet, thus leaving the
country on “auto-pilot”.
“The country right now is clearly on auto-pilot with the
President having gone AWOL. He has not attended to the appointment of Cabinet,
leaving a policy gap, lack of confidence and free-for-all which is now
manifesting in the failing of the bond note, price hikes and spinning economy
which Zanu PF is clueless to contain,” he said.
Zimbabwe Congress of Trade Unions secretary-general Japhet
Moyo warned this could trigger industrial action and unrest if urgent solutions
were not found to stem the massive haemorrhage of workers’ earnings.
“This is reflective of the failure of the bond note and
shortage of cash which has eroded disposable income for workers. They get their
salaries from banks and these prices are eating into our salaries and the
disposable income of the workers is being eroded over the years,” he said.
Moyo said there had been no communication between workers,
government and employers owing to the collapse of the Tripartite Negotiating
Forum, which last met two years ago.
“That missing link has seen us fail to get information on
what is informing these price hikes, while salaries are stagnant, this could
trigger job losses. There needs to be harmony between workers and employers,
especially in times like these,” he said.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, who
is part of Mnangagwa’s delegation in China, however, insisted that the bond
note had not failed.
He attributed the current shortages to what he described as
“a mismatch between supply and demand of cash in the market hitting the
economy”.
“It’s not about the bond notes, but about the disparity
between the quantity of money in circulation and the demand of foreign
exchange. As monetary authorities, we are putting in place foreign exchange
facilities to the amount of $400 million to increase the supply of forex to
meet demand,” he said.
Confederation of Zimbabwe Retailers Association president
Denford Mutashu, however, said there was no need to panic as the price hikes
were temporary and could be stemmed by a Cabinet announcement and monetary
policy correction.
“The public should not panic about the temporary price
increases being experienced on the market on selected products. Most
manufacturers have cited shortage of foreign currency and the obtaining
parallel market premiums. It will be folly to continue to think that the cash
parallel market would subsist,” he said.
“However, it is also worrying that while RBZ has so far
done so well to allocate the 30% of the forex they retain, 70% retained by
banks remains a mystery. This could go a long way in dealing with these
issues.”
Mutashu said the beef industry was being hit hard by a
foot-and-mouth outbreak.
“Beef producers have attributed the increase of beef prices
to foot-and-mouth disease in parts of Mashonaland Central, which limits
movement of cattle as government moved to contain it. However, it is prudent
that the President announces Cabinet urgently, and a competent one for that
matter. The new Cabinet will certainly spur confidence,” he said.
Delta Beverages company secretary Alex Mahamure allayed
fears that there could be an increase in prices of their products, saying
although they had been hit hard by foreign currency shortages, they would not
drop production levels.
“It’s a given that our operations are being affected by
shortages of foreign currency. Everyone is being affected. There is little
access to foreign currency … we operate in US$, you can’t have a spike of
prices in that currency. That’s not how we work,” he said.
Confederation of Zimbabwe Industries president Sifelani
Jabangwe said there was no need to press the panic button, saying the outlook
was actually bright for industry, with capacity having improved from last year.
“Cement is more to do with supply side constrains, because
manufacturers have had technical challenges which they are working on and,
unfortunately, it happened more or less around the same time for Lafarge which
had a technical problem with their silos and then PPC also had a specific
problem, so they have not increased their prices, but it’s the speculators who
are doing the usual,” he said.
Jabangwe said the prices of products in the food basket
monitored by government and industry have remained stable and will not be
spiking anyti
me soon.
“The other products, we sat down with the Consumer Council
of Zimbabwe. The other products have remained more or same like in the basket
of goods, they have remained within $8 of what they were in January. So those
are the basics, those are the important goods. Remember, we have about 14
products monitored by government. The other ones may go up and down owing to
currency issues on the black market,” he said. Newsday
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