Govt, industry in prices deadlock

GOVERNMENT and business yesterday reached an impasse over arbitrary price hikes after a lengthy meeting between Industry and Commerce minister Mangaliso Ndlovu and captains of industry in the capital. The meeting ended with the minister demanding action against retailers charging multiple prices for goods and services.

BY TATIRA ZWINOIRA

Zimbabwe has witnessed a sharp rise in prices of basic goods blamed on the new 2% transaction tax on money transfers which was imposed last month and the loss of value on the black market of the local bond note currency and electronic transfers against the US dollar.

After the meeting, Ndlovu said the three-tier pricing system for the bond note, US dollar and real-time gross settlement systems (RTGS) – was illegal and that the law should be enforced.

“Government has been clear that it is (multiple pricing) not legal in our economy and the law enforcement has to take its course,” Ndlovu said.

“However, it is not in our ministry to enforce the law. We only spell out what is legal where we can which is under our ministry.”

Cabinet last month resolved to enforce the Bank Use and Promotions Act that prohibits putting a premium on the US dollar. Some retailers, particularly pharmacies, were demanding payment in US dollars.

Ndlovu said Zimbabwe needed to address the pricing issues at source, such as increasing production to enable exports.

“Foreign currency is a commodity that has to be earned if I may put it that way. We do not have adequate foreign currency and government is doing everything it can to make sure we allocate the scarce resource to productive sectors. So we cannot talk about having enough foreign currency, but government is doing all that it can,” he said.

“What came out from the
deliberations is that there are more fundamental issues that have to be addressed. Prices are only a reflection of structural deficiencies that need to be addressed. So the discussions were candid, frank, open and all stakeholders had a chance to make their contributions. We have agreed to have a similar meeting in the time to come.”

However, after the meeting, several industry players told NewsDay no concrete solutions had been agreed to deal with pricing challenges after two-and-half hours of talks.

They said the growing mismatch between RTGS transfers and the US dollar was driving price increases.

The rise in prices has seen inflation rising to 20,85% at the end of last month from the previous month’s 5,39%.

This was the first double digit official inflation rate recorded since 2008 which is based on the consumer price index.

Retailers and wholesalers whose business is import-dependent have particularly raised prices while those who were not import-dependent hiked prices due to the rise in the cost of living.

“Look, the reality is that they (RTGS transfers and hard currency) are not the same. This business of saying they have the same value is just not true and government needs to address that urgently,” one industry player said.

According to the Confederation of Zimbabwe Industries, industry needs $2 billion to recapitalise, translating to a monthly foreign currency requirement of $167 million. On average, government is supplying about half that requirement.

18 Comments

  1. whilst it is true that the 3tier pricing system must be outlawed and people are thrown behind bars it is equally true that this current minister is not equal to the task at hand and maybe if they rope in guvheya who did wonders last time when prices almost went out of control but were quickly corrected after his military style intervention, and thats the quality of the man required at the moment to head this ministry.

    1. It is not the Minister that is not equal to the task but the whole Zanu crew from ED downwards till one elisha. Zimra is using the 3 tier pricing system but you want private businesses to be complaint yet government isn’t. We have a big elephant in the room and it is none other than Zanu, else no change and we shall die suffering.

  2. tendai chaminuka

    We hear that some government departments are also asking for US$ for some of their services like the medical fraternity.Moti chhiko nazvo nhai Cde Minister

  3. It amazes me when govt officials say “…govt is doing all it can…”. Its not. If it was, we would have no ghost workers by now, the civil service would be trimmer and more efficient and some level of confidence in the govt would have returned. Instead, we have belligerent personnel masquerading as omniscient demi-gods but clearly out of any functional, credible or practical ideas….and being paid for it!

  4. Elisha imboshandisawo pfungwa kufunga. Mugabe once tried that kind of stupidity and it failed. The fact that you are being paid to write your stupidity. Here we need real man who thinks and strategies. Do you think running business needs people like Guvheya who seems to be like a fools among fools. Guvheya is worse of than Chinotimba. Address the fundamental issues here, maiti munozvigona hezvo mapihwa the keys to state house. Basa is to put resources in tracking Chamisa and MDC Alliance instead of working zvamakaisirwa mu office. Why would you want to put business people behind bars, this shows the level of your thinking and you think thats mentra resonate with investors. Investors are there to make money and accumulate wealth, if you want free things like donations do not go to the business communities.

    1. Begging or threatening business to implement cheaper pricing Mr. Minister is never and has never been a solution. Government should address the economic fundamentals that caused the prices to skyrocket in the first place. And the reasons still lead firmly to the government’s own doorstep. Flooding the market with ghost money branded as RTGs coupled with the insistance by government to regard their worthless Bondnote as equal to the US dollar when even a child in ECD knows its not, government over-expenditure on non-productive things such as luxury vehicles and above all the non availability of forex to producers and importers of essential goods among a plethora of many other reasons. This cabinet is at sixes and sevens on how best to run a functional economy. It is a scandalous shame to preside over an impoverished society whose majority can ill afford to buy life’s basic essentials. Using the same benchmarks as the previous government Mugabe is seen as faring much better.

  5. Nyatsimba Mutota

    The answer is to remove bond notes. Bond notes failed from the day they announced that they are going to introduce them. Mangudya should resign and pave way for someone with sense.

    1. bond notes are only one tenth of currency in circulation for heaven sake so there will never be a solution to the problem but its the very business people and jails are the answer

  6. Dont politicise everything vamwe vachapedzisira voti chero kumitisirwa mukadzi zvoda Chamisa, stop the political cold war first and let those with the mandate to run the levers of the economy do their job. Many of the challenges we are facing as zmbos are man-made for selfish interests

  7. TWO CENTERS OF POWER CONTESTING FOR SUPREMACY IN DETERMINING DOMESTIC MACROECONOMIC POLICY DIRECTION

    Ministers summoning industry to an “URGENT MEETING” to discuss price increases when government’s macroeconomic policy failures continue to destabilize the domestic economy is akin to a village chief calling his elders to an urgent village meeting to discuss measures to reduce the smoke polluting his village instead of putting 100% policy focus on containing the raging fire slowly gutting down the entire village community. Smoke may cause a cough but tackling the fire would solve the real underlying problem destroying the village.

    The junior Ministers of Finance and Economic Development, Industrial and Commerce in the Cabinet seem to lack power and authority over national policy matters. The new governing system of the EDM government appear to have deliberately created two contesting centers of power – in charge of macroeconomic policy and industrial development portfolio. The most politically powerful economic think tank influencing direction of macroeconomic policy and development agenda resides within Jongwe House apparently enjoying the upper hand after the disastrous bungling by the junior portfolio ministers in the new Cabinet. In terms of our representative democracy, the Cabinet Ministers are responsible for the portfolio policies of government and can be summoned to Parliament to account for policy failures. Diluting the power and authority of cabinet ministers – especial on matters of finance and economic development – through an informal transfer of some Ministerial powers to ruling party political czars outside of the Cabinet and unaccountable to Parliament weakens our constitutional democracy. Two centers of power in terms of national economic policy determination creates national policy risk and uncertainty – not good for business.

  8. Thumbs up to the Govt for coming to the rescue of consumers. Some businesses are allocated foreign currency by the RBZ, yet they go on to charge the imported products in USD. Let the law take its course on these scrupulous business people who are bent on profiteering.

  9. extended dambudziko

  10. We thank the Government for acting on the 3 tier pricing.Government is not charging in USD.Please do not genaralise issues by saying Government is charging in US Dollars.The law should take its course by suing those charging in forex.Lets use the legal tender that we have here.Where do you expect my grandmother from the rural areas to get forex to buy medication.Pharmacies doing this need to be dealt with.

  11. Zanu pf, clueless coconuts…

  12. @Goredema, can you check on a comment on the reasons for price hikes in relation to retailers and wholesalers who are not import dependent?? they said they raised prices in response to the rise in cost of living, surely can they explain who has been affected by this cost of living if it is not the employee??? yet they have not raised any salary?? the simple issue is we are playing games on one another as zimbos, the destine of this country is in our own hands guys, lets be responsible and owner up to our mistakes.

  13. industry is playing with peoples lives, this should stop

  14. Ko tati tadiiko hama hatisati tati kusvika tati eke

  15. Why were bond notes introduced when they are not a currency? This is robbing people of their money. we worked for many years only to have what we worked for being eroded.People are being charged in forex when its something that is non existant.The solution is to have a currency not the bond notes.

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