The Sunday Mail
There is this irrational profiteering tendency that has subsisted among Zimbabweans since the hyper-inflationary era of 2007-2008.
And it is proving very difficult to rid our society of this cancer despite the stability brought about by the Zanu-PF Government’s adoption of a multiple currency regime in early 2009.
We quite simply have some within the business sector – and particularly among retailers and importers, but not to discount manufacturers – who believe in pushing revenues through high prices.
Their justification is the same: high costs of factors of production. Well, this reasoning is both true and false.
True in the sense that labour, transport, electricity, finance and taxes are not coming cheap and these expenses are passed on to the end-user.
As it stands, costs of factors of production are between 25 to 30 percent higher in Zimbabwe than in neighbouring South Africa, Mozambique, Botswana and Zambia.
But it is also false in the sense that manufacturers are making super-normal profits as the margins they place on some goods are way too high.
As a result, imported products that are transported to Zimbabwe and pay import duties land in the country at a cheaper price than those manufactured locally.
The sad and harsh reality that the producers seem to be blind to is that while they reap those profits in the short-term, overpriced goods are unsustainable because we are simply making local produce globally uncompetitive.
How then do we export and bring money into the country?
Our manufacturing sector is now a pale shadow of its former self and continues to shrink at an alarming rate as it loses grip of its traditional markets and locals opt for cheap imports.
Who can blame them? How then do they “Buy Zimbabwe”?
The nation only has got two options, either to keep consuming truckloads of the imported, cheaper products and build other countries’ economies in the process, or to step up to address the price disparities so that Zimbabwe’s products can also become competitive locally, regionally and globally.
Going ahead with business as usual in the hopes that prices will self-correct, is leaving things to the vagaries of the “invisible hand” and yet we have power of agency over many of the contributory factors.
Salvation will not come on a silver platter, profiteers will not wake up one day and realise they have “eaten” enough.
Action is needed if we do not want our productive sectors to go to the dogs while consumers suffer from overpricing.
This is a developmental issue, and one that ever Zimbabwean must take seriously.
There is need to pursue strategies that will improve productivity. New technologies, for example, will boost productivity and bring down costs.
Means of production that worked a decade ago have no place in industry today.
We have to learn to think innovatively and respond to the challenges we face in a sustainable and structured manner.
Much investment is needed in our infrastructure and our finance people – both in the public and private sectors – have to find ways of structuring agreements that will see money being put into water, transport, agriculture and energy.
As a nation, we can only ignore the fact that the corruption and bureaucracy at our borders and on major highways is killing productivity at our own peril.
Policy-makers, public officials and those in the private sector must become alive to the possibilities for growth that lie latent in Zimbabwe.
They must become energised enough to apply their minds to problem-solving instead of consistently whining while the ordinary people of Zimbabwe break their backs beneath the burden of poor services and overpriced goods.
EDITORIAL COMMENT: Better productivity will lower prices
The Sunday Mail
There is this irrational profiteering tendency that has subsisted among Zimbabweans since the hyper-inflationary era of 2007-2008.
And it is proving very difficult to rid our society of this cancer despite the stability brought about by the Zanu-PF Government’s adoption of a multiple currency regime in early 2009.
We quite simply have some within the business sector – and particularly among retailers and importers, but not to discount manufacturers – who believe in pushing revenues through high prices.
Their justification is the same: high costs of factors of production. Well, this reasoning is both true and false.
True in the sense that labour, transport, electricity, finance and taxes are not coming cheap and these expenses are passed on to the end-user.
As it stands, costs of factors of production are between 25 to 30 percent higher in Zimbabwe than in neighbouring South Africa, Mozambique, Botswana and Zambia.
But it is also false in the sense that manufacturers are making super-normal profits as the margins they place on some goods are way too high.
As a result, imported products that are transported to Zimbabwe and pay import duties land in the country at a cheaper price than those manufactured locally.
The sad and harsh reality that the producers seem to be blind to is that while they reap those profits in the short-term, overpriced goods are unsustainable because we are simply making local produce globally uncompetitive.
How then do we export and bring money into the country?
Our manufacturing sector is now a pale shadow of its former self and continues to shrink at an alarming rate as it loses grip of its traditional markets and locals opt for cheap imports.
Who can blame them? How then do they “Buy Zimbabwe”?
The nation only has got two options, either to keep consuming truckloads of the imported, cheaper products and build other countries’ economies in the process, or to step up to address the price disparities so that Zimbabwe’s products can also become competitive locally, regionally and globally.
Going ahead with business as usual in the hopes that prices will self-correct, is leaving things to the vagaries of the “invisible hand” and yet we have power of agency over many of the contributory factors.
Salvation will not come on a silver platter, profiteers will not wake up one day and realise they have “eaten” enough.
Action is needed if we do not want our productive sectors to go to the dogs while consumers suffer from overpricing.
This is a developmental issue, and one that ever Zimbabwean must take seriously.
There is need to pursue strategies that will improve productivity. New technologies, for example, will boost productivity and bring down costs.
Means of production that worked a decade ago have no place in industry today.
We have to learn to think innovatively and respond to the challenges we face in a sustainable and structured manner.
Much investment is needed in our infrastructure and our finance people – both in the public and private sectors – have to find ways of structuring agreements that will see money being put into water, transport, agriculture and energy.
As a nation, we can only ignore the fact that the corruption and bureaucracy at our borders and on major highways is killing productivity at our own peril.
Policy-makers, public officials and those in the private sector must become alive to the possibilities for growth that lie latent in Zimbabwe.
They must become energised enough to apply their minds to problem-solving instead of consistently whining while the ordinary people of Zimbabwe break their backs beneath the burden of poor services and overpriced goods.
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