Shortages looming after price controls


IT seems the Zimbabwean government never learns. While the public will probably welcome reports that prices of basic food items such as maize meal, rice, cooking oil, sugar, salt, flour and bread will revert to the March 25 levels, the next thing that is likely to happen is that those basic commodities will disappear from the supermarket shelves.

NewsDay Comment

It is such a shame that the government would want to use the COVID-19 pandemic to introduce its “command economics”, which is likely to fail as spectacularly as its “command agriculture” which ended up becoming a feeding trough for political fat cats and their associates.

Whenever there is a pricing crisis in a country, it points to problems in the country’s economic fundamentals, and without addressing the root causes, then price controls will never be a solution.

While business may seem to have agreed to revert back to the old prices given that they cannot openly defy the Presidency, slowly we will see those basic commodities disappearing from supermarkets shelves and only to be found on the parallel market at probably double or even triple the current prices.

Other progressive and forward-thinking governments on the continent and beyond have simply ensured that their citizens are cushioned during the lockdown period without forcing traders to reduce their commodity prices.

These are the “voodoo” economics that have kept Zimbabwe stagnant all these years while other countries around us have continued to progress.

Although the Reserve Bank of Zimbabwe fixed the interbank exchange rate at $25 to US$1 for the duration of the COVID-19 lockdown, that does not mean the rates on the parallel market will also remain stagnant. And this is where the majority of people trade.

If the prices were collectively agreed to, as we are made to believe, and genuinely so, why were they made in the first place? Does it mean the traders are admitting guilt that they simply hiked the prices speculatively? Does it mean what the bakers have been saying, for instance, that the bread price increases were determined by market forces, a lie?

History is awash with incidents where government has interfered with pricing of goods and services, leading to the disappearance of goods from the shelves. It is our prayer that this is not going to be a similar cycle.