Government must decommission bond notes because they are fueling a thriving black market, a senior MDC official has said.
MDC secretary for Economic Affairs Tapiwa Mashakada said the solution lies in coming up with strategies to destroy the black market.
He said the problem of pricing does not even require the Competition and Tariff Commission and called for a three-pronged solution including “killing the parallel market by immediately decommissioning the bond note because it is fueling a black market-driven pricing model”.
The CTC on Thursday threatened to come down hard on businesses engaging in excessive pricing of goods.
In a statement the CTC said excessive pricing and fixing were bad business practices that distort the smooth functioning of the economy.
“In this respect, the commission will not hesitate to embark on investigations in sectors identified as colluding or price fixing or excessively pricing with a view to remedy such anti-competitive practices within the confines of the act,” said CTC in a statement.
“All producers, wholesalers and retailers are therefore expected to comply with the Competition Act with immediate effect or else face the wrath of the law.” It added.
The Competition Act gives CTC the necessary teeth to enforce its orders and decisions. It provides that for enforcement purposes, the commission’s orders can be registered with, and recorded as a civil judgment of the High Court.
Government has had trouble borrowing money from abroad as prospective lenders have had doubts over Zimbabwe’s ability to repay. This explains the rapid loss of value of the bond notes in September and October: government simply printed notes that were not backed by hard currency, and traders started charging premiums to shoppers using the notes.
The International Monetary Fund has dispatched a staff mission to Zimbabwe that has met with officials of the new government and assessed the country’s fiscal and economic situation.
According to IMF spokesperson Gerry Rice, the regular staff visit to Harare in early December updated the Bretton Woods institution’s assessment of Zimbabwe’s fiscal position, foreign exchange developments and inquired about the new administration’s economic plans.
In late November, some automatic teller machines were again issuing US dollars — a clear indication that President Emmerson Mnangagwa’s transition team has been able to borrow something.
Introduced by Mugabe’s government in November 2016 as part of a desperate bid to stave off a cash flow crisis, the green notes are supposed to be traded 1 – 1 with the US dollar but are trading at anything up 1-1,3. Zimbabwe abandoned its own currency in 2008 and officially adopted the American currency as its own. But continued economic uncertainty led people to stash dollars outside the country, prompting a critical shortage.
Mnangagwa has proclaimed an amnesty for people to return money stashed abroad to the country.
Mashakada also said the ministry of Industry must gazette prices of all basic commodities as at July 2016 because most of the price increases are not consistent with the cost structure.
The former Economic Planning minister said as a third measure “government should temporarily introduce a rebate and zero rate on all essential food imports in order to flood the market, introduce competition and prevent speculative shortages”.
“Please note that no any other intervention other than those prescribed above will stop the high prices charged by retailers and wholesalers.
“Economic saboteurs must be brought to book as they have taken advantage of arbitrage created by the parallel market exchange rate,” he added.
Mashakada concurred with government that retailers and wholesalers are making super profits by charging exorbitant prices on basic consumer goods and services.
“For example, how do you justify a kg of beef costing $8 up from $4? I’ve just cited one product out of many product lines,” he said.