No re­prieve for con­sumers

...as drought’s blight spreads from farmer to cus­tomer

Lesotho Times - - Business - Retha­bile Pitso

CON­SUMERS are hav­ing to dig deeper in their pock­ets to foot food, rent and trans­port ex­penses among oth­ers as the al­ready ris­ing cost of liv­ing has been ex­ac­er­bated by the on­go­ing drought.

Over the last four months, the prices of maize meal, flour, cook­ing oil and other ba­sic com­modi­ties in­creased by over 20 per­cent due to in­creas­ing im­port costs and the South African rand’s slump against ma­jor cur­ren­cies. As Le­sotho’s gi­ant neigh­bour sneezes due to the ef­fects of the worst drought in decades and other fac­tors, the Moun­tain King­dom has also caught a cold.

As if those in­creases were not enough, hap­less con­sumers are likely to fork out more for util­ity bills as both the Le­sotho Elec­tric­ity Com­pany and Wa­ter and Sew­er­age Com­pany have pro­posed a 25.4 per­cent in­crease for elec­tric­ity and 13 per­cent for wa­ter and sew­er­age ser­vice tar­iffs re­spec­tively.

The pinch of the spi­ralling cost of liv­ing is be­ing felt the most among low in­come earn­ers who are in­creas­ingly find­ing it dif­fi­cult to make ends meet.

the Le­sotho Times spoke to some fruit and veg­etable ven­dors in Maseru this week, who said they had been left with no choice but to in­crease prices to break even, much to the cha­grin of their cus­tomers.

Fruit ven­dor, Moeketsi thamae, said the high im­port costs were eat­ing into his profit mar­gins, hence his de­ci­sion to raise prices.

“Since the be­gin­ning of the year, our cus­tomers have had to con­tend with price in­creases. Not too long ago, a sin­gle ba­nana was go­ing for M2.50, but now cus­tomers have to fork out as much as M4. Nat­u­rally, they think the in­creases are un­jus­ti­fied but all we are do­ing is bal­anc­ing the cost of buy­ing with that of sell­ing so we can make a profit and sup­port our fam­i­lies,” Mr Thamae said.

an­other ven­dor said they could no longer give cus­tomers dis­counts be­cause “they were bad for busi­ness”.

“We are no longer dish­ing out dis­counts like we did in the past be­cause they are bad for busi­ness. Nowa­days, a dis­count is tan­ta­mount to a loss,” he said.

“Our cus­tomers have to re­alise that we also have a duty to put food on the ta­ble for our fam­i­lies at home. We also go to the retail shops to buy maize meal, meat and other essentials since our fam­i­lies can’t sur­vive on the fruits we are sell­ing.”

Food traders at Mafafa mar­ket also said busi­ness was no longer brisk, as most cus­tomers were be­ing put off by the price in­creases.

“Our cus­tomers still ex­pect to buy a plate of pap and chicken for M20 as well as pap and red meat at M25. When we in­creased the prices, they stopped buy­ing, so we have the dilemma of op­er­at­ing at a loss or hav­ing no cus­tomers,” said Moli­beli Mat­sitsa.

“all the raw ma­te­ri­als we use are now more ex­pen­sive. The prices of maize meal, cook­ing oil and gas among oth­ers have shot through the roof, but cus­tomers still ex­pect a plate full of food with ex­tras such as spices and sauces.”

Some of the small-scale traders said the bit­ing eco­nomic con­di­tions had made them vul­ner­a­ble to un­con­ven­tional and il­licit means of gen­er­at­ing in­come such as pros­ti­tu­tion and in­vest­ing in the MMM Global pyra­mid scheme which has taken Le­sotho by storm.

MMM Global prom­ises its mem­bers re­turns of up­wards of 30 per­cent and bears an un­canny re­sem­blance to MKM, which promised in­vestors un­sus­tain­able re­turns un­til it went bust in 2007, leav­ing about 400 000 Ba­sotho count­ing their loses.

the Cen­tral Bank of Le­sotho and Con­sumer Pro­tec­tion as­so­ci­a­tion have since con­demned the pyra­mid scheme which was founded by Sergey Mavrodi, a rus­sian con­victed and jailed for four-and-a-half years for de­fraud­ing 10 000 in­vestors through a sim­i­lar Ponzi scheme in his home coun­try.

How­ever, a num­ber of Ba­sotho, in­clud­ing Ha abia trader ‘Ma­mat­seliso Sello, have de­fended the scheme, say­ing it was a “quick and sure” way to gen­er­ate in­come.

Ms Sello said thanks to the pyra­mid scheme, she man­aged to raise the start-up cap­i­tal she needed to go to Botswana so she could buy hand­bags and shoes for re­sale.

“af­ter I grad­u­ated from the Na­tional Univer­sity of Le­sotho, I could only find a job at a com­puter shop from which I was paid very lit­tle. The job made me very de­pressed since I could not pay my bills,” she said.

“But since I be­gan gam­bling, I re­signed from my job and started my own busi­ness. I trav­elled to Botswana last month to buy stock that I am sell­ing at a good profit. My prospects have now im­proved and I will soon go to Botswana again to buy stock for the win­ter sea­son.”

Retail su­per­mar­kets have also been com­pelled to come up with strate­gies to re­duce the im­pact of the drought on pric­ing.

Pick n Pay Store Man­ager Eti­enne Beukes told this pa­per the su­per­mar­ket had come up with a range of in­ter­ven­tions to cush­ion con­sumers from the drought-in­duced price in­creases.

“We have been run­ning spe­cials on some se­lect prod­ucts to en­sure our cus­tomers are able to buy them at an af­ford­able price,” said Mr Beukes.

“We have also em­ployed the strat­egy of lim­it­ing cer­tain items per cus­tomer to en­sure that as many of our cus­tomers ac­cess the prod­ucts that would be on spe­cial. We have even cre­ated a sep­a­rate stor­age fa­cil­ity for prod­ucts that would be on pro­mo­tion.”

Mafafa food trader Moeketsi Lehloka

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