Price controls loom for electricity, water, fines . . . Govt to swoop on retailers for smuggled goods
THE Government through the National Competitiveness Commission (NCC) will monitor the pricing of goods and services by parastatals such as electricity, water and fines to ensure that they conform to regional levels as part of improving ease of doing business and improve competitiveness among local companies.
This will come into effect when the NCC is formed once the National Competitiveness Commission Bill is made into law.
Industry and Commerce Minister Dr Mike Bimha said the National Competitiveness Commission Bill, which would pave way for the formation of a NCC to repeal and replace the National Incomes and Pricing Act (Chapter 14:32) has passed through the Lower house and he would take it to the Upper house.
“As you might know we have a Bill that we have introduced in Parliament, which has now passed through the Lower House, which I now have to go and take through the Upper House, the National Competitiveness Commission Act, which will also have an entity that will be finding ways of assisting companies in Zimbabwe on a daily basis, to be more competitive and advising Government on what ways to take to enhance the competitiveness of our companies.
“In the last summit of Sadc (Southern Africa Development Community) that we had in Swaziland, there was agreement by the Heads of State and Government that one area that we have to focus on in order for us to implement the industrialisation strategy was competitiveness. So it is an area that we continue to talk and debate about and make sure that we get our organisations to be doing something about this concept of competitiveness,” said Dr Bimha.
But it is the issue of pricing of services provided by Government entities that is set to be a major focus once the bill has been passed. There have been numerous complaints from business and the public that services provided by the Government were expensive and this was resulting in the increase in cost of production and ultimately prices.
In the past Government has been forced to put price control measures on business but according to the Bill focus will be on reducing cost of production than targeting the end product. According to the Bill, functions of the NPC will among others include “review all price changes by the Government, statutory corporations and local authorities when charging or levying user fees, rates penalties and fines payable by the public and clients.”
Dr Bimha said this stance has been taken because the National Incomes and Pricing Act which ushered in the National Incomes and Pricing Commission which was once headed by Mr Goodwill Masimirembwa never achieved its intended target.
In fact, according to economists, price controls on industry resulted in the closure of some companies. Captains of Industry said the move to look at pricing of cost drivers was the way forward as this will naturally result in the decline in prices due to market forces.
“The National Incomes and Pricing Act never achieved what it was meant to achieve. Its major failure was the issue of price control, which left companies and businesses crippled as there was no proper method of pricing. We are happy that the current Bill seeks to encourage competition and once companies start competing, prices go down. In the retail sector there is competition but not as much in other sectors like transport and housing where there is little competition,” said Consumer Council of Zimbabwe Matabeleland regional manager, Mr Comfort Muchekeza.
The issue of pricing has also been a major problem for exporters who are failing to compete with goods produced from outside the country because of high cost of production. The NCC, according to the Bill, will also seek to develop policies to make Zimbabwe competitive on a global scale. Confederation of Zimbabwe Retailers president Mr Denford Mutashu said the Bill was sending a good message that Government was ready to work with industry.
“The Bill is meant to create an environment that will encourage competition rather than forcing price control, which ended up killing more businesses,” he said.
He said upon being set-up, NCC should ensure that the country’s prices of commodities and services are in line with that of other countries in the region.
“When the Commission has been set up we expect it to go on the ground and to be vibrant and interact with the stakeholders. Zimbabwe still has one of the highest prices in the region and that needs to be corrected,” said Mr Mutashu.
Zimbabwe National Chamber of Commerce president Mr Davison Norupiri said the Bill was important especially on encouraging export competitiveness.
“What is unique about this Bill is that it doesn’t just ensure competitiveness within the country but it looks at competitiveness of local companies compared to the whole of the trading blocs. The coming in of the Commission will establish where and how we fair as a country in terms of being competitive and then go on to specifically tackle the issues directly. The Bill is not a duplication of the Competitions and Tariffs Commission as some may think. This one was carefully drafted for specific conditions in Zimbabwe. It is a noble idea and ourselves as business we are for it and we expect this Bill to sail through,” said Mr Norupiri.
Confederation of Zimbabwe Industries president Mr Busisa Moyo said the Bill National Competitiveness was a long term replacement of the Statutory Instrument (SI) 64 of 2016.
“The Bill is key to promoting competitiveness long-term. This Bill coupled with a minimum local content Bill will create a fertile environment for industrial expansion and value chain development. SI 64 will have to be replaced with a local minimum content quota for Government, private sector and including wholesalers and retailers operating in Zimbabwe,” said Mr Moyo.
He further said: “Government has focused a lot on ease of doing business but not on cost of doing business, the two are related but are not the same”.
Meanwhile, a Cabinet-appointed committee will this week swoop on retailers and wholesalers countrywide to check compliance with import controls under Statutory Instrument 64.
This follows the rampant smuggling of goods that have been struck off the general import licence to stimulate domestic manufacturing capacity.
Products such as cooking oil, cereals, soap, spaghetti, rice, flour, detergents, sugar, salt and cremers are being brought into Zimbabwe via illegal ports of entry/exit. It is understood some retailers purchase the goods in South Africa and then ferry them across the Limpopo River in speed boats and canoes.
The consignments are loaded onto trucks at the illegal ports and transported to Harare and other urban centres where they are sold in certain shops and on the
streets.