Government seeks solution to stop price hikes

Government is engaging the manufacturing and retail sectors with a view to establishing their operational challenges, which have recently resulted in arbitrary price increases that are beyond the reach of many low income earners. The National Competitiveness Commission (NCC), a successor body to the National Incomes and Pricing Commission (NIPC), is spearheading the engagements.

The NCC falls under the purview of the Ministry of Industry, Commerce and Enterprise Development. It is expected that after the engagements, the NCC will compile a comprehensive report and present it to the Minister of Industry Dr Mike Bimha, so that appropriate action is taken to curtail the exploitation of consumers.

As part of the discussions, the NCC will meet industry and business representatives including the Confederation of Zimbabwe Industries (CZI) and the Zimbabwe National Chamber of Commerce (ZNCC).

Dr Bimha confirmed the latest developments last week, adding that the inquiry would be widened to include non-basic commodities such as dishwashing liquid, lotions and perfumes, whose prices have also risen in recent months.

"My ministry is working on price escalations for essential products and consultations are continuing. These players (CZI and ZNCC) will make their presentations to NCC and explain the various constraints, not just in terms of increasing prices, but also issues threatening the viability of an industry, and we will have to come up with long-term plans to deal with these issues," said Dr Bimha.

The NCC confirmed to The Herald Business that it has, in deed, been tasked by Government to consult manufacturers and establish the challenges they are contending with.

Results from preliminary engagements suggest that manufacturers are declining to take blame for price increases of goods and services, saying shortages of foreign currency to import raw materials and spare parts are the main drivers of price increases.

It is believed that producers and retailers want the Reserve Bank of Zimbabwe (RBZ) to provide them with adequate foreign currency to keep production costs at bay. Critically, the manufacturers and retailers are also reportedly imploring Government to ensure forex availability for the production of all basic commodities to arrest any further price hikes.

Said the NCC: "We were tasked by our parent ministry (Industry, Commerce and Enterprise Development) to engage the industry players on basic commodities price hikes in the country, but we are yet to reach the final position to present it to the Minister (Dr Bimha).

"The problem is that the industry players are saying foreign currency challenges, high exchange rates and (the) parallel market continue to threaten the situation. The collective local industry resolution was that for the situation to be arrested, the Government needs to subsidise essentials to reduce the burden on the general populace."

Zimbabwe is grappling with foreign currency shortages, which have resulted in foreign payments bottlenecks. This has caused supply interruptions of some goods. Manufacturers that cannot wait for RBZ to allocate them funds, are understood to be turning to the parallel market.

However, the exchange rates have dramatically fallen from highs of 85 percent towards the time former President Robert Mugabe resigned, to anything between 40 percent and 55 percent for transfers. US dollar exchange rates with bond notes are around $120 (bond) for US$100, down from $150 mid to late November.

Zimbabwe imports 60 percent to 70 percent of raw materials used in the manufacturing sector — and the introduction of Statutory Instrument 64 of 2016, which seeks to protect the local industry from unfair competition brought by imports — has led to a surge in demand for foreign currency by producers rather than retailers..

Between April and mid-December this year, the cooking oil sector received almost $54 million in foreign payments to purchase raw materials.