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‘Command economics won’t work’

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BY TAPFUMANEI MUCHABAIWA
ANALYSTS have implored government not to resort to command economics in dealing with skyrocketing prices of goods and services.

This comes after President Emmerson Mnangagwa recently said government had exhausted moral suasion as to bring back sanity into the market.

Analysts believe if government resorts to price controls, there would be chaos in the commodities supply chain.

University of Zimbabwe economics lecturer Gift Mugano said government should not simply blame business, but deal with its side of the equation.

“Businesses are now responding as rational economic agencies to the economy. The government must look at the root cause of this predicament which is money supply,” he said.

“The government cannot assure the nation that there will be price stability before we talk of arresting money supply. Government must deal with its own fair share and stop any avenue for anyone in business or any economic agent to begin now to respond to safeguard their cash flows and working capital.”

Political analyst Vivid Gwede said government should rejuvenate its social contract and avoid price controls.

“We don’t know the instruments that the President promises to use, but if it is another resort to command economics, it will fail,” he said.

“Apart from the tremors from the geopolitical crisis in Ukraine which have made food prices to soar globally, there are domestic problems affecting the Zimbabwean economy.

“These require a political solution. Anything short of a reboot of the social contract will be piecemeal and unable to resolve the root problems.”

National Consumer Rights Association spokesperson Effie Ncube said price increases were a response to economic collapse.

“The truth is, (government) has no capacity whatsoever to arrest skyrocketing prices. The major reason why they won’t succeed is because the President and his government are the reason why prices are going up,” Ncube said.

Academic Methuseli Moyo, however, said the statement by Mnangagwa should have been a mere expression of his discomfort over the increase in prices and should not be interpreted as a call for price controls.

“Prices are determined by market forces and nothing else. I am sure the President knows that and was merely expressing his displeasure with price increases. Price increases are a global problem, mainly emanating from the effects of the Russian invasion of Ukraine,” Moyo said.

In 2007, government resorted to price controls hoping to restore sanity on the market, but the move resulted in massive food shortages.

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