Price hikes: Govt must shun populist price controls

Guest Column: Learnmore Zuze

FOLLOWING a fresh wave of price hikes for basic commodities last week, Zimbabweans woke up to a terrifying headline pertaining to the possibility of the introduction of price controls by government. This came particularly after the shock rise in the price of bread and the incessant increases in fuel prices. In its fury, the current government, it was reported, may be mooting the possibility of introducing the capping of prices for the essential commodities to protect the consumer from “heartless and insensitive” business owners.

Life for Zimbabweans remains generally unbearable and word on the street is that the unrelenting escalation of prices is set to continue. Fuel has been on an upward trend right through from the beginning of the year virtually eroding the meagre salaries of the workers. Prices for the very basic commodities shot through the roof and many theories abound as to the triggers. Chief among the theories was the slight rise in civil servants’ salaries earlier in the month. This theory gained currency in light of the uncanny collision between Treasury’s pay date for civil servants and the jaw-dropping price rises.

Price controls are not a new phenomenon in Zimbabwe; they have been used as an instrument to control runaway inflation and to leash perceived unscrupulous business people. Price controls were introduced in 2007 during the period of hyperinflation as well as in 2017 following the introduction of bond notes in the previous year. As has become the omen preceding price controls, business owners are first labelled as “economic saboteurs”. Once that has occurred, we can be sure that ‘tight’ measures are then taken against the business. It would have been laudable if the “tight measures”, indeed, leashed errant business people.
The grim reality is that the “tight measures” in reality choke the overburdened ordinary Zimbabwean on the street.

It is against the backdrop of this possibility of price controls that I make the case that any person of a sound mind, who has lived through Zimbabwean life and its complications in the last two decades, can vouch for the futility of price controls. As mentioned before, price controls, in the wake of scary inflation, have been introduced in the past. But nowhere in the world have price controls been reported as a success. Zimbabwe doesn’t even need the failure examples of distant countries to drop this fearsome idea of price controls. Zimbabweans know too well the immediate results of introducing price controls. The matter is simple. It’s an all too familiar script for Zimbabweans.

The surest thing that follows price controls is a critical shortage of such commodities and a thriving black market. In essence, price controls are as sure-fire recipe to boost the black market. It would be foolhardy for the incumbent government to traverse the ill-fated route of price controls after having seen the tragedy former President Robert Mugabe wrought on this country with the same idea. Zimbabwe experienced one of its most trying times when, for months on end, the country trudged on with a worthless currency and empty shops. The greater part of 2007 and 2008 had Zimbabweans scrounging for a living under near inhuman conditions as virtually everything had to be queued for.

It is ironical that the government itself had been preaching the gospel of letting market forces determine prices all along. There is nothing positive that results from populist policies. While people may feel relieved in the short term, the worst will be sure to follow. Instead of the government continually accusing business of profiteering and using the exchange rate to fix prices, it is time for self-introspection. A national administration cannot live on pointing fingers and being reactionary.

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The government of President Emmerson Mnangagwa has a real task of thinking; a task to think practically hard on how to turn the fortunes of this long-suffering nation. Zimbabwe needs real sustainable solutions to arrest the economic freefall.

There are plenty of lessons to be taken from the Mugabe era where populist ideas reigned supreme. The simple challenge with populist ideas is that they stand on clay legs; populist ideas cannot last the distance. We all remember how taskforces were set up during the Mugabe era to crack down on businesses perceived to be charging higher prices. We saw how Mugabe, through the then Reserve Bank of Zimbabwe governor, Gideon Gono, remained headstrong that the worthless bearer cheque was close to the United States dollar in worthiness. The introduction of the freedom trains were all populist ideas which failed to last the distance.

The current government, being composed of people who held influential offices in Mugabe’s administration, must shun such policies that bring immediate gratification, but later trigger immense suffering for the masses. Real practical and lasting solutions to the economic crisis are required, not impulsive and emotional political decisions.

 Learnmore Zuze is a legal officer and writes in his personal capacity.

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