The Sunday Mail
Dr Gift Mugano
At a time when Zimbabwe is celebrating the dawn of a new era, the people’s mood has been dampened by ridiculous price increases across various sectors of the economy, ranging from building and construction, food and beverages to transport.
In addition, cash challenges are still a menace. Ironically, the general populace is saddened by this situation and is looking up to Government for redress. No one is looking up to the private sector to exercise restraint on price increases.
In a very short space of time, Government, through the 2018 National Budget Statement, has put in place robust measures to raise productivity and attract foreign direct investment.
Among these measures are dealing with corruption, amending indigenisation law, rationalising the Civil Service through an array of cost-containment measures with a view to creating fiscal space for capital expenditure and reducing budget deficits, and reforming State-owned enterprises.
Government efforts to turn around the economy have been endorsed by the Africa Export and Import Bank which gave Harare a staggering US$1,5 billion aimed at stabilising liquidity and fostering production, particularly in mining and manufacturing.
President Emmerson Mnangagwa’s State of the Nation Address detailed Government’s economic turnaround plan, reiterating measures addressed in the National Budget Statement; and expanding on Command Agriculture, international re-engagement and commitment to free and fair elections.
Government extended Command Agriculture to small grains, maize, soyabeans, tobacco, cotton, livestock, fisheries and wildlife conservation on top of maize and is developing a local content policy to boost national production.
To drive implementation, various arms of Government have been tasked to come up with 100-day performance targets.
This paradigm shift is expected to change Zimbabwe for good. However, there is a worrying behaviour among various business sectors regarding general pricing. I have tried to look for a clear explanation as to whether this behaviour is stemming from market indiscipline, rent-seeking (profiteering) or sabotage.
I have settled for rent-seeking for now, but I still have second thoughts. Dear reader, consider this: Prices of chicken and beef are now around US$14 per bird and US$12 per kg, respectively;
The price of kapenta has gone up to around US$18 per kg, yet they are procured at US$7 per kg; Floor tile prices skyrocketed from around US$9 per square metre to US$36; Transport fares, in some instances, tripled during the festive season;
The price of bread increased by about 22 percent; it took the Industry, Commerce and Enterprise Development Minister to rein in things;
Astronomical price increases were effected on electricals, plumbing, roofing sheets and general building material; and Cash hoarding continues regardless of the Bank Use and Promotion Act compelling businesses to bank cash within 24 hours.
What do you call this, dear reader? Whatever it is, be it sabotage, market indiscipline or rent-seeking behaviour, it is bad!
It appears Government and the private sector are singing from different hymn books. In 2018, business must not drive Government into a corner by being arrogant. President Mnangagwa made it clear in his inauguration speech, at the Zanu-PF Extraordinary Congress and in the SONA that a market-oriented economy was desirable.
That vision should not be received with spikes of retrogressive behaviour which come in the form of ridiculous price hikes, artificial shortages of goods and cashhoarding.
A piece of trade advice to the private sector: price hikes are a sign of shortages. To address the situation overnight, Government may be forced to open the border; that is remove Statutory Instrument 64 or its subsequent amendment, SI122.
I don’t think business is ready for regional competition.
Work being spearheaded by the Industry, Commerce and Enterprise Development Ministry on a local content policy is well-thought out.
Business should be supportive of what Government is doing. We must work together to build a better Zimbabwe. Government alone cannot do it. Iwe neni tine basa. Asante Sana.
Dr Gift Mugano is an economist and Registrar of the Zimbabwe Ezekiel Guti University. He wrote this article for The Sunday Mail.
