The Sunday Mail
Prices of goods and services in Zimbabwe are in many cases more than 30 percent higher than in other Sadc countries as businesspeople seek high profit margins at the expense of consumers.
The Consumer Council of Zimbabwe says the culture of greed and profiteering is rampant in local business, while economists say the high prices are a symptom of deep-seated ills like rampant corruption and mismanagement.
Government is working to improve competitiveness by transforming the National Income and Pricing Commission into the National Competitiveness Commission.
A snap survey by The Sunday Mail last week showed that many local goods and services were overpriced.
And despite the high prices, institutions like the Zimbabwe Electricity Distribution Company are in the midst of pushing for tariffs hikes.
For instance, in South Africa petrol costs USc74 per litre but averages US$1,24 in Zimbabwe despite the fall in global oil prices.
While potatoes cost about US$2 per kg in Zimbabwe, the price is about US$1,18 in South Africa and US$1,30 in Mozambique.
Healthcare costs are also more expensive in Zimbabwe, with common treatments here like insulin pegged at US$100 – more than double the cost in South Africa. Bread, milk, water and other basics also cost much more in Zimbabwe than in South Africa, Mozambique, Botswana and other countries.
Last year, mobile phone operators were forced to slash voice tariffs by about 38 percent following a directive from the Postal and Regulatory Authority of Zimbabwe, but the costs still remain higher than in most other parts of the region.
Luxury services like DStv subscriptions in South Africa cost between US$6,70 and US$47 but despite the US dollar strengthening against the rand, the same services cost almost double in Zimbabwe at between US$11 and US$81.
The NCC ad-hoc committee has advised Government to look at costs related to fixed water tariffs, labour, Environment Management Authority levies and National Social Security Authority fees.
Consumer Council of Zimbabwe executive director Mrs Rosemary Siyachitema said, “Rough estimates show that basic goods in Zimbabwe cost about 30 percent more than what other countries in the region charge. In some instances it is because we do not have the technology to produce some of the goods.
“The other reason is that some of our people are just greedy. For example, you find a company charging a certain fee for a product but once another player comes in, that price is drastically reduced which shows that such a product was overpriced.”
Industry and Commerce Minister Mike Bimha said Government was fast-tracking establishment of the NCC to address competitiveness issues.
He said President Mugabe had approved the NCC commissioners who will soon sworn into office.
“We have made a lot of headway in terms of establishing the National Competitiveness Commission. A few weeks ago, President Mugabe approved the list of commissioners who will be part of this commission.
“This is obviously a very important step and in due course the names of the commissioners will be made public when they are sworn in by the President.”
Minister Bimha said the NCC would come up with realistic pricing models.
“The mandate of the NCC will be to look at competitiveness in the economy. It will not be a matter of looking at just the pricing but comparing the costs of having a good or a service and whether such costs justify a certain price,” he said.
Economist Mr Brains Muchemwa said the major problem with pricing models in Zimbabwe was that they were not linked to productivity.
He, however, said corruption was to blame as extra costs are incurred through payment of bribes and other underhand deals are consequently passed on to the consumer.
“Corruption has been so institutionalised in both private and public sectors. A close look at most of the infrastructure projects reveals huge unexplained illogical costing that eventually filters into the general pricing levels in costs of utilities,” he said.
“Scandals are being exposed on improper handling of big projects and indeed its corruption that would have infiltrated to the extent of pushing costs to unrealistic levels.”
Mr Muchemwa said managerial ineptitude was also to blame.
“On another hand, management ineptitude is one of the significant variable that has been explaining company collapse since changeover from the hyperinflation era.
“The huge debt pile-up on most corporate balance sheets on the back of poor cost control has resulted in most corporates to chock under debt, plunging into bankruptcy, schemes of arrangement and judicial management.
“Harrowing stories being told about Hwange, Municipalities, Zisco, NRZ and many other collapsed private sector companies reflect the deep seated challenges of management ineptitude.”
Reserve Bank Governor Dr John Mangudya is on record saying there is need for local “devaluation” of the US currency through price reductions to normalise costing.
