PRESIDENT Mnangagwa, whose administration has opened up the economy to dictates of a free market, has lamented indiscipline within the business sector which is characterised by wanton price hikes and other unethical practices.
For the past few weeks, consumers have watched in horror as prices of basic goods and other commodities have risen beyond their reach while others have completely disappeared from the shelves, only to re-emerge with their prices hiked. It is a jungle out there and the long suffering consumer is having to bear the brunt of a business sector that is out to profiteer at all costs to the detriment of ordinary people.
Granted, cost drivers such as fuel and electricity have gone up marginally but power for instance, has been uncompetitively priced for a long time and can therefore not be used as a justification for increasing the price of a commodity. Consumer watchdogs have decried the astronomical increase in the price of bread this week after retailers hiked it to ZWL$16 a loaf from around ZWL$10. While bakers cited expensive flour as a major cost driver, the Grain Millers Association of Zimbabwe said supplies of subsidised flour by millers across the country were constant.
National Bakers Association of Zimbabwe president, Mr Dennis Wallah, said while his organisation does not prescribe prices to individual members, they have different cost structures. He cited wages, the price of fuel and unavailability of subsidised flour as the major cost drivers. Other commodities that are now beyond the reach of ordinary Zimbabweans include beef (which is now around $70/kg), eggs, mealie-meal and cooking oil.
According to the Zimbabwe National Statistics Agency, the Poverty Datum Line for a family of five as at the end of August was pegged at ZWL$1 826, 99 while a majority of middle income earners take home slightly above ZWL$1 000. They simply cannot make ends meet and the situation is worse in the rural areas where retailers are ripping off poor folk by exorbitantly pricing basic goods like mealie meal taking advantage of the absence of consumer watchdogs and other price monitoring agencies.
Addressing the first edition of the Rural District Councils Meeting in Harare on Thursday, President Mnangagwa warned unscrupulous businesses against continued price increases, saying Government will be forced to take action against such practices. He said a meeting will be held next week between Government and businesses to find ways of resolving the unwarranted price increases. “Wherever I am going these days, people are complaining about the ever-increasing prices of basic commodities saying you promised to whip such business into line, so where is that whip?” the President said.
“As a father, you don’t discipline your children every time they do something wrong, but just warn before taking any action. However, I think we have reached a point where action has to be taken because we don’t see any reason why there is this continuous rise in prices.”
President Mnangagwa said the meeting with the business community, being organised by the Ministry of Industry and Commerce, will give Government an opportunity to appreciate their challenges.
He said Government had secured funding for the establishment of Silo shops mainly in rural areas where the most vulnerable live. “We now have the funding and we have identified seven commodities that would be subsidised,” said President Mnangagwa.
“These include mealie-meal, salt, sugar and cooking oil, among others. These shops target the rural populace who are facing the most difficulties.”
We welcome the proposed meeting between Government and the business community and hope it will go a long way in addressing the current price hikes. We call on both sides to be frank in their deliberations and come up with tangible solutions that will halt the price madness. In a free market economy, it is incumbent upon businesses to exercise a high degree of ethical practices and fairness.
In the prevailing inflationary environment, it is convenient for businesses to cite rising costs as a basis for increasing prices. But we contend that should be done in a fair manner, taking into account the earning power of consumers. In the same vein, consumers can also exercise their power by boycotting certain products but unfortunately they cannot do so effectively when it comes to basic commodities that they need on a daily basis.
Our hearts particularly go out to the rural folk who are incapacitated because of a crippling drought which has deprived them of their staple foods – maize, millet, sorghum and other cereals. On that score, we are glad that Government has secured funding and will be subsidising seven commodities, among them mealie-meal, salt, sugar and cooking oil, in its Silo shops targeting mainly the rural populace.
We also call on the business community to introspect and adopt a self-policing mechanism whereby errant businesses are subjected to censure. Government cannot revert to price controls because they are retrogressive and run contrary to the basic tenets of a free market economy.