Zanu-PF's poor policies driving inflation

On 11 May 2017 the Financial Gazette published a disturbing story which captured what a majority of motorists have already noticed, fuel prices going up by more than three percent.

"At most filling stations, petrol prices have gone up by an average of US$0, 06 per litre to US$1, 38, from about US$1, 32 per litre, translating to an increase of about four percent."

Our concern is that oil prices have remained below US$50 per barrel as per the latest figures released by renowned GlobalPetrolPrices.com.

Statistics show that there was a decrease in 45 of the 104 reviewed countries, with prices remaining constant in 52 countries, and an increase in 12 countries.

As is now the new normal, Zimbabwe joins the few countries on the list of countries with rising fuel prices despite the fact that the country already had the highest price in the region, we find this unacceptable.

The article in the financial gazette attributes the fuel price to the decrease in supply of ethanol from the Lowveld.

We have always raised concern about the pricing of the fuel in Zimbabwe; our argument revolves around the actors as well as the regulation of the industry.

We argued then as we do now that TRAFIGURA has captured Zimbabwe's US$1 billion fuel industry, through collusion with corrupt ZANUPF officials, this unholy alliance is aiding and abating the fuel price shocks.

The cartel now controls the pipeline, the wholesale and the retail which can only happen in the absence of a regulatory authority.   

We argued then as we do now that, the regulatory authority

Zimbabwe Energy Regulatory Authority (ZERA) is playing a subordinate role to the ZANUPF politicians and ignoring its role to regulate the procurement, production, transportation, transmission, distribution, importation and exportation of energy derived from any energy source.

Another survey reveals that shelf prices of basic goods are also drastically going up with consumer baskets increasing by at least 2% in the past two months.

This is a result of Chinamasa's unorthodox approach to the management of this economy. The increase of fuel price is also a major driver of inflation.

Chinamasa has in the past imposed taxes on several commodities at one point he imposed tax on beef and cereals, the consumer is always the final bearer of the tax burden.

The introduction of the Zim Dollar through the back door is another driver of inflation, the responsibility on this blunder falls squarely on Chinamasa and ZANUPF's court. We argued that the bond note was an unbacked currency that would create massive distortions in the economy; the unpleasant results are now manifesting.

ZANUPF also imposed SI64 banning imports at the same time creating a special import license system which has increased the cost of doing business. The ban on imports was premature considering the fact that the local industry has no capacity to supply the local market. The focus was supposed to be on capacitating, incentivising local industry as well as protecting against unfair competition.

Excessive government spending is exacerbating the liquidity crisis; this has chocked the financial sector, ultimately driving inflation upwards.

We therefore urge the government to retrench unnecessary expenditure including executive travel, scrap the bond note, repeal SI64 and deal with the anomalies in the fuel industry before inflation goes up to double figures.