Price hikes: Fresh attempt to paralyse economy

AS Zimbabwe inches towards this year’s harmonised elections, there are growing concerns that industry could be working with opposition political parties to undo the achievements of the Second Republic by orchestrating a general paralysis in the country through price hikes that bite the consumer hard.

In the wake of a spate of incessant price increases, diversion of basic commodities from the formal market to the informal sector, and other illicit financial activities, President Mnangagwa has warned businesses to shape up or ship out, pointing at the possibility of opposition political parties hopping into bed with business to trigger a protest vote come elections.

In his weekly column in The Sunday Mail this week, the President noted that although his administration has gone out of its way to promote local industry—through several pro-business concessions, that goodwill is apparently being abused, raising the spectre of a potential unholy alliance between business and political parties.

“It is becoming increasingly clear our trust is getting abused and even betrayed. We even wonder if at all we are dealing with Business anymore, or with politicians disguised as company executives, seeking a political upset. Privileges can be withdrawn; the same way they are granted. Equally, politicians seeking to engineer market failures for definite political outcomes will be dealt with as political opponents, and through rules appropriate to politics”.

Zimbabwe will in August hold harmonised elections which pollsters predict will be won by the ruling Zanu PF party, as it rides on people-focused projects such as dam and road construction and also food security.

However, analysts contend that in the wake of a collapsed opposition, the only challenge to Zanu PF could be an economy in paralysis that could squeeze the general populace.

They added that such a dimension cannot be discounted as Zimbabwe is dealing with capital susceptible to manipulation by foreign forces.

The analysts said there is a political dimension to the current challenges that the country is facing, adding that there is a multi-pronged assault from elements who are determined to turn the public against President Mnangagwa and the Second Republic.

Political analyst Mr Rutendo Matinyarare said businesses are

in cahoots with the opposition which is on the payroll of the United States of America in Zimbabwe.

“This is something we have known since the same businesspeople sabotaged our fight against sanctions after we approached them asking them for evidence for our anti-sanctions case against banks in South Africa. We wanted to know how sanctions were affecting them.

“They refused to give us evidence and when we asked why they were sabotaging us, they said that they didn’t want sanctions to go because they were trying to protect themselves from foreign businesses that would enter Zimbabwe much easier and out-compete them if sanctions were removed.

“But now, we see the same companies using their monopoly to sabotage the country so badly by manipulating prices (even raising prices in US dollars) and now it’s forcing the government to allow others to import competing South African products that the same businesses said they were afraid would come into Zimbabwe if sanctions on Zimbabwe were lifted. So clearly they were not trying to maintain sanctions to be an entry barrier to competition, but they were trying to maintain their monopoly to sabotage the government through manipulating prices when instructed by their handlers,” said Mr Matinyarare.

“Our understanding is a number of business owners, managers and even some high-ranking civil servants are on the payroll of the American Central Intelligence Agency which brings US dollars in black boxes to pay them to sabotage the country”.

The Confederation of Zimbabwe Retailers (CZR) yesterday conceded that there could be manufacturers and suppliers who are starving the formal market.

In a statement, CZR president Dr Denford Mutashu said it was disheartening to note that some manufacturers and suppliers had decided to starve the formal market and are now offloading basic goods onto the informal market, creating artificial shortages in formal retailers and wholesalers.

“This behaviour has seen retail players struggling to restock while the insatiable appetite for the USD and shunning of the local ZWL have created a market failure.

“We call upon all unregistered tuckshops and small to medium businesses to register with authorities and manufacturers and suppliers should stop supplying goods to ‘runners’ and unregistered businesses. The continued supply of goods to unregistered businesses has triggered unwarranted shortages on the market,” he said.

Mr Mutashu added that Government must set up an inter-agency committee to investigate companies which access forex from the Reserve Bank of Zimbabwe Auction System and make each one of them account for the last dollar.

Responding to questions from The Herald, Schweppes Zimbabwe group managing director, Mr Charles Msipa, whose company produces the popular cordial Mazowe Orange Crush and other soft drinks, admitted that speculators have been hoarding their products, but argued that retailers should not be constrained by the prevailing official exchange rate.

“We are aware that there are speculative purchases at our major wholesale customers who sell products in ZWL. Speculators buy products in bulk in ZWL and offload the product in informal markets in US$. The arbitrage opportunity presented by the gap between the official and parallel market exchange rates drives speculative behaviour,” said Mr Msipa.

“The wholesale channel is at risk of speculators who take advantage of arbitrage opportunities presented by the wide disparity between official and parallel market exchange rates. As far as we are aware, our retail customers avail products supplied on the shelves. Formal wholesalers and retailers should be allowed to price products competitively — they are currently constrained by having to apply the official exchange rate”.

To cushion the consumers from arbitrage and incessant price increases, Government two weeks ago removed duty on various basic commodities and yesterday Finance and Economic Development Minister Professor Mthuli Ncube gazetted Statutory Instrument 80 of 2023 suspending duty on the products.

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