THE Government will not hesitate to take punitive measures against unscrupulous businesses with a tendency of wantonly increasing prices of basic commodities for the sole purpose of profiteering, a Cabinet Minister has warned.
Speaking to Sunday News, Industry and Commerce Minister Nqobizitha Mangaliso Ndlovu said the Government was feeling betrayed by the business community’s audacity to unnecessarily increase prices of commodities despite its efforts to create a conducive operating environment.
This comes after the country has over the last two weeks witnessed an upsurge of price hikes.
Minister Ndlovu said the Second Republic led by President Mnangagwa has shied away from introducing price controls as part of its efforts of minimising interference on the operations of the private sector.
“We have tried our best in avoiding interfering in the pricing system but we are realising that they (businesses) are not helping Government’s efforts in trying to revive this economy.
“All we do is to create an environment for them (to operate) but I believe the same is not passed onto the consumer because the consumer is the hardest hit. Government has done a lot, if I can tell you the number of subsidies that we are giving the business community and the expectation being that they will keep their prices within reasonable limits, but what’s happening (price hikes) doesn’t make sense,” he said.
Minister Ndlovu said it was folly for businesses to link price increases to the exchange rate as prices should be only be determined by inflation trends.
“Prices should not really be a reflection of the exchange rate. This is not a foreign exchange market we are talking about.
“We are talking about our economy and we are busy subjecting our people to abuse on this basis . . . we have this mentality of wanting to import everything so we want to price our products on what we believe will be the rate when one is importing,” he said.
Minister Ndlovu said most businesses have abdicated the obligation of responsibility and developed a culture of profiteering.
“A retailer by just going to buy from a wholesaler and stocking is making three times more profit than somebody who is actually paying rent in a factory and manufacturing, this is the ill-discipline that has crippled into our private sector and I challenged them when we met on Monday (last week) that they need to police themselves because when Government then comes in it might be viewed negatively but we would certainly stand with the people,” he said.
Minister Ndlovu said businesses were exaggerating the economic “crisis” only to satisfy their profit motive.
“I asked (business) people about why they were increasing prices, they told me about black market rates while people are selling 100 percent local products, so I don’t know if at all they are affected,” he said.
Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu confirmed the significant rise of basic commodities and household appliances prices.
He, however, said part of the increase in prices was necessitated by manufacturers who also increased the prices of their products.
“Manufacturers increased the prices of their goods, for example, sugar went up by their own admission by 120 percent over a very short period of time. They (sugar manufacturers) cited that various cost build ups have also been increasing into their production line and they have also indicated that the fuel situation has not spared them…,” said Mr Mutashu.
He said an increase in the sugar price had ripple effects as it was used as one of the ingredients in the production of various goods.
“There is a feeling among us, the players involved in the consensus building, that they were not involved or that they were not consulted before the price shot up and yet sugar is a basic product used by domestic households while at the same time as a raw material by industry, it has ripple effects on downstream prices…,” said Mr Mutashu.
Nonetheless, he said there was a need to change the business community’s pricing behaviour as it was impoverishing people.
“People’s pricing behaviour has been modelled around making quick profits and returns within a short space which has obliterated and eroded the purchasing power of consumers especially the marginalised consumers,” said Mr Mutashu.
He, however, said he was optimistic that the prevailing price madness would come to an end as Government was making great strides towards engaging various stakeholders.
“There is engagement that is taking place among us, the key stakeholders, Government, manufacturers and retailers. We have had several meetings to try and map the way forward and we are quite optimistic that these engagements will yield better results in as far as pricing is concerned,” said Mr Mutashu.