Market force must determine prices
FOR a start, government has over the decades tried and failed dismally to control the prices of commodities and services. Whenever the price of bread got fixed, bread vanished from the shelves, only to re-emerge on the informal market at prices higher than the government prices.
Naturally, a shortage will occur and this drives bread prices much higher. This is a phenomenon Zimbabweans have witnessed over the years Zanu PF has been at the helm. It was government’s desire that bread should be sold below production costs, just to please the populace.
This has happened with fuel, and we witnessed a crippling fuel shortage and the resultant long queues. Government tried to give fuel for free to individuals and industry by pegging fuel prices so low.
Almost everyone then could afford a full tank at very low prices. But the party would soon be over as the government could no longer fill up everyone’s tank to make them happy so that they forget government inadequacies.
It worked to some extent as shortsighted people still had patience to sleep in queues just to purchase the “manna” fuel. So Zimbabweans did not complain about the shortage of fuel nor the long, winding queues.
Since fuel was almost free, people did not care much. Unable to suckle its children indefinitely, government abandoned the price controls and even let fuel be sold in forex.
Initially prices shot through the roof, but market forces quickly came into play to lower and steady the prices.
The government had tried this with electricity tariffs. We witnessed enormous load-shedding for 12 months when the government tried to control electricity tariffs.
Petrol and diesel are imported while Zimbabwe generates some of its electricity and imports the rest using forex.
Consumers pay for electricity using our much weaker dollar. With the government determined to please the electorate with free electricity, consumers were paying almost nothing for electricity.
This meant that government was bearing all the burden to import electricity. So it wasn’t surprising that citizens quietly bore the brunt of an excruciating 18hour load shedding regime because electricity was for free.
Like in the fuel case, government soon realised the futility of fixing electricity tariffs, an action that actually made electricity totally unavailable.
The government could no longer keep everyone happy because it was unable to provide cheap electricity to every household in the country.
The economy shrunk as a result of this government ineptitude as most production processes require electricity to power them.
The Zanu PF-led government is usurping roles that should be played by market forces. Market forces do a better job than the government.