African Media Initiative chief executive officer Eric Chinje says emphasis must be put on productivity and cost structures to reduce high pricing models in the country.
BY TATIRA ZWINOIRA
This comes as the recently released Reserve Bank of Zimbabwe (RBZ) economic review for the month of September reported a further slide in inflation to -3,11% from -2,77% in the previous month.
Speaking to NewsDay during the African Media Initiative meeting in South Africa last week, Chinje said if the issue was not monetary, then productivity and costs must be examined to lower prices.
“If it is not a monetary or fiscal problem, then obviously you have to look at productivity and costs as well as the other factors that affect the productivity of the economy as well as demand. It comes back down to demand and supply. Zimbabwe should be looking at creating a substitution economy that is based on reduction of certain imports,” Chinje said.
“Some decisions have to be made both politically and within the local private sector to look at reducing significantly imports because clearly the country does not have the volume of resources that would allow it to make these external payments which would then reduce the cost of imports.”
In efforts to increase local production and encourage locally produced goods and services, government has pledged to increase taxes on imported goods that could be found locally.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
However, despite these attempts, pricing has still remained high as local production continues to be weighed down by heavy costs that are leading consumers to source goods from outside the country from cheaper markets such as South Africa.
The decline in the South African rand against the United States dollar has bearers of the latter currency able to buy more than when purchasing in shops whether imported or locally produced goods.
Confederation of Zimbabwe Retailers president Denford Mutashu yesterday told NewsDay that enablers towards costs should be looked at for retailers and wholesalers to reduce their prices and drive demand.
“We need to look at all the enablers to come up with a deliberate cost reduction in power generation and availability due to power cuts, fuel for companies that run on generators as prices remain stagnant despite international prices going down and the cost of borrowing,” Mutashu said.
“Factors for production are still quite high. Investment must be directed towards these enablers to reduce prices, because whenever prices are reduced, volumes do not increase due to declining demand brought about by the high prices.”
He said policies must be put in place that support local industry “otherwise the industry will die”.
Chinje said “someone should do a study on how much money is being burned by imports that could be made locally and why these things are not being made”.
“Are we facilitating the local production of these goods and services that do not have to be imported?” he queried.
According to the RBZ economic review, the year-on-year food inflation stood at -3,72% in September 2015, shedding 0,13 percentage points from the -3,59% recorded in August 2015.
