Steps to rein in pricing madness get thumbs up Minister Mthuli Ncube

Ivan Zhakata Herald Correspondent

ANALYSTS and other stakeholders have welcomed the steps being taken by the Government to arrest the prevailing price madness with new measures to preserve the value of the local currency taking effect this week, while more unscrupulous traders will be sanctioned today.

Following President Mnangagwa’s recent pledge that the Government would decisively deal with the issue of escalating prices, the Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) has imposed punitive measures on four major distributors of basic commodities for unethical practices.

Finance and Economic Development Minister Professor Mthuli Ncube at the weekend said more companies involved in the supply chain of basic commodities would be blacklisted today for their role in fuelling price hikes.

He said new measures to protect and preserve the value of the local currency would be implemented this week as the Government takes action against economic saboteurs.

Prof Ncube said the local currency had contributed to economic productivity and the revival of some industries hence the need to restore its value.

The president of the Confederation of Zimbabwe Retailers, Mr Denford Mutashu, said the measures by FIU were very progressive and served as a warning to would-be offenders.

“It is very progressive, but what we need the FIU to do is to follow up on the value chain,” he said.

“It is a very big challenge and there is a need to sanitise the root of the value chain because when it is affected, we are left with no option and this affects the economy.

“It is also a big challenge for the formal channel because not everyone is able to pay in United States dollars. The move by the FIU is commendable and we urge the Unit to continue to enforce stiff measures. It is our hope that the prices of commodity will remain stable and favourable to the general citizens.”

Economic analyst Mr Persistence Gwanyanya said the FIU’s role in addressing the issues related to the rejection of the local currency and the flooding of commodities on the black market was highly commendable.

“We have always said that one of the key challenges we face as an economy relate to behavioural issues. Once we agree that the economy may not be well at the moment, we believe that behavioural issues are making the situation worse.

“The extent to which some of these activities are happening is daring and cannot go unchecked. They are pulling down the economy and the measures that are being put in place are going to result in a significant impact on the economy,” he said.

Political analyst Mr Rutendo Matinyarare welcomed the moves by the Government saying some businesses were working in cahoots with the opposition.

“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 scrapped”.

Speaking after a tour of retail shops and interaction with the public in Bulawayo on Saturday, Prof Ncube said: “The Zimbabwe dollar is our lawful currency, our domestic currency, it is here to stay. It is what has given all these companies the competitiveness. That is why we have 80 percent of the goods being locally produced. This was not the case when the US dollar was the only currency that was circulating.

“Now we have this currency which has led to a kind of boom in the domestic economy and improved competitiveness and this is all due to the presence of the Zimbabwean dollar. We need it, we need to preserve it and protect it as Government. If we stop using the local currency, it will lead to some companies closing down. Some companies were able to reopen and invest because we introduced the Zim dollar.”

He said the new measures were expected to slow down the skyrocketing prices.

“Surely we will be announcing measures which I cannot mention at the moment this coming week to ensure that we strengthen the domestic currency and reduce the negative impacts that are eroding value for our currency,” said Prof Ncube.

The RBZ froze bank accounts for Saxin Trading, Simrac Enterprises, Brainscope Investment, and Munella Enterprises for allegedly dumping goods on the black market and refusing to trade in Zimbabwe dollars.

“The FIU noted that these errant distributors transact almost exclusively in foreign currency (cash) yet they do not bank the cash as required under the Bank Use Promotion ACT,” the FIU said.

“The entities are being penalised and will further be referred to the Zimbabwe Revenue Authority for suspected tax evasion.

“The FIU has also increased surveillance operations, identifying and taking punitive action against traders engaged in exchange rate manipulation.”

Economic analysts said the measures by the FIU were commendable as they would address challenges in the flow of the value chain.

President Mnangagwa last week said business was trying to sabotage his Government ahead of elections in August through unjustified price increases and rejecting the local currency.

The Zimbabwe Statistics Agency (Zimstat) last week said annual inflation raced to 11.3 percentage points from April to 86.5 percent this month.

Monthly inflation has reached double digits after rising sharply from 2.4 percent last month to 15.7 percent in May.

ZimStat measures inflation using a ‘blended’ average of United States dollars and Zimbabwe dollar prices.

Some retail operators have pegged their exchange rate at an incredible rate of US$1: $5 500, way above the official figure of $1,888.

The move is meant to frustrate the use of the local dollar, which remains legal tender, and promote the use of forex.

A number of shops, including popular fast food outlets, have disconnected their electronic payment systems in a bid to mop up foreign currency.

Illegal forex dealers using POS machines for transactions involving large sums of money have also contributed to the inflated rates.

Prof Ncube said some business operators were just taking delight in the misery of consumers.

“Nothing changed between last week and this week, we are seeing maize meal doubling in price, rice doubling in price and it is totally unjustified. Basically, our desire as Government is that we want these prices to stabilise and come down. Government has done everything to support businesses.

“Recently, we removed the 15 percent surrender in terms of the domestic transaction in hard currency. Surely that is a benefit to local business, we must see a kind of reciprocity and the reciprocity is another hike in prices?.

“It is totally unacceptable. We have been lowering interest rates, we moved from 200 percent and now we are at 140 percent. So, we are wondering whether we should increase it again. But again there will be an outcry that there will be an increase in non-performing loans. This is what banks will be telling us. But clearly, Government will be justified in terms of raising interest rates.

“We have just discovered that the middlemen, between producers and retailers, the so-called aggregators are also part of the problem. So, we decided that on Monday (today) we are going to fine and blacklist them so that they really stop these kinds of activities. Any shop that starts behaving so badly, their licences are going to be withdrawn and I don’t want them to blame the Government,” said Prof Ncube.

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