BUSINESS has come out against price controls and accused
those pushing for such controls as fronting agents of regime change in the
country.
The spectre of price controls looms large after President
Emmerson Mnangagwa and other senior officials in his administration have
accused business of profiteering and wantonly raising the cost of basic
commodities.
But Confederation of Zimbabwe Retailers president Denford
Mutashu said anyone pushing for price controls was doing it for selfish
reasons, saying prices can only be brought down through a strategic development
of the manufacturing sector.
“Price controls should never be one of the options and it
is my firm belief that those pushing for price controls are doing so for
selfish ends and with a wild dream of bringing the government down. The
unintended consequences of price fixing include creation of the black market,
further price distortions and empty shelves,” Mutashu said.
Former Finance minister Tendai Biti concurred that price
controls would result in serious shortages of goods.
“It is total madness because it’s government itself which
is at the epicentre of the price increases,” Biti said.
“It is government itself which has mismanaged the monetary
policy instead of re-dollarising. It has tried to de-dollarise and the net
consequence is that we have a black market which is flourishing, the black
market rate right now is around 5,2 and once the cost of the US dollar goes up,
this means the cost of things goes up. If there is anything that requires price
control it is controlling an arrogant and incompetent government; that is the
one that needs controlling.”
Biti said the introduction of people’s shops, as suggested
by Mnangagwa, would not work because it had failed before.
“Those things don’t work, they are not working in Venezula;
they did not work when we had Baccosi shops in 2007, 2008. It does not work,
allow the market to work remove distortions dirigisme and the mark will do the
job for you.”
Confederation of Zimbabwe Industries president Sifelani
Jabangwe said the economy works on supply and demand coupled by other economic
forces and not commands.
“Price controls have shown in the past that they do not
give us the result that we want,” Jabangwe said.
“If anything, they escalate the situation. Definitely, we
recommend against such measures. The prices are a reflection of policies on the
ground, so they are symptoms of the challenges that businesses are going
through.”
He added: “What we need to do is really identify what the
problem is and the problem we have seen before is aligned to the moving
exchange rate. We can correlate any movement of prices to the movement of the
exchange rate.”
However, the Zimbabwe Congress of Trade Unions (ZCTU)
accused business of double standards after refusing to increase salaries for
their workers, yet increased prices of their goods.
ZCTU president Peter Mutasa said business were the authors
of austerity measures and neo-liberalisation of the economy and must,
therefore, disguise their shenanigans by increasing prices.
“You can’t get out of a recession by implementing austerity
measures, because you will kill domestic demand, you invariably kill the economic
activity, the few companies that are still there and you bring a lot of
hardships to the citizens,” Mutasa said.
“So, business was disregarding all that and we also warned
them against continuing with the bond note, but they wanted them because government
had taken a cooperate welfare approach where it was taking resources from the
poor and giving them to the rich, the companies and shareholders under the
guise that they were subsidising exports.”
Mutasa added: “Business was also happy with the continued
creation of money, ignoring the warning that we should fight together, now that
the business is taking the heat of austerity and neo-liberalism, they are now
covering themselves by increasing prices while salaries are stagnant, those are
double standards.”
Mutasa pointed out that the current crisis in the economy
needed business, labour and government to meet and find a lasting solution
which will balance the fortunes for everyone, otherwise unhappy workers could
take to the streets.
“We are, however, not encouraging our workers to take to
the streets, but a dialogue to end this crisis, but this is entirely up to
government to make a choice. They can call for dialogue and solutions can be
found or they can choose to ignore,” he said.
Meanwhile, as business and labour haggle over the price
issue, government appears to have no immediate solutions to the recent spate of
price hikes that has ravaged the country and forced labour unions to demand for
salary hikes after business refused to bow to Mnangagwa’s request to reduce the
prices of goods and services.
After Tuesday’s Cabinet meeting, Finance minister Mthuli
Ncube failed to give a concrete response on how government was planning to
contain the spiralling prices that have effectively eroded people’s disposable
incomes, leaving almost the entire population dangling below the poverty datum
line.
“The issue of prices was not a subject matter of discussion
today (Cabinet), but it has been an issue over the couple of days,” Ncube said.
“But suffice to say, government will continue to be seized
with the matter, that is why we are making sure that we keep the lines of
dialogue and communication open with industry so that there are no surprises,
so that we try and understand their pricing models. We work together to make
sure that there are no surprises in terms on hikes.”
The country was hit by a wave of price increases last week,
with bread prices soaring to ZWL$3,50 for a standard loaf up from ZWL$2
following a 50% hike in the prices of mealie meal and flour. This created a
domino effect on prices of other basic goods and services.
But in response to the bread price hikes, Ncube said: “What
we have done as government is to open up access to GMB (Grain Marketing Board)
to the smaller bakers as well, so as to increase competition.”
Business appears to be digging in saying they can’t lower
prices owing to acute foreign currency shortages.
Struggling to get foreign currency at the bank rate,
business has been forced to stretch into the black market where rates have
risen to ZWL$520 for US$100. Newsday
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