Buy Zimbabwe Products Sober Policy

A call by the Government encouraging the Zimbabweans to buy locally produced products is a sober national policy. This would see a rise in demand for products from our local industries which are subjected to stiff competitions form imports. In view of this state of affairs, the Government is encouraged to impose protectionist import policies which defend local companies against cheap imports which are flooding our local market.

The recent call to encourage Government departments to buy all service vehicles from local car assembling companies like Willovale Motor Industry and Quest Motors is a noble move that we should cherish. This promotes the local industry which would be able to sustain itself and create employment for the local skills with ready labour. In turn, the companies will be able to contribute meaningful taxes to Government.

This system should be extended to all industries so that we consume local products first, then we look for imports where there are shortages or limited supplies. At the moment, local products are subjected to unfair competitive advantage against imports which are cheap and readily available. This is good for our local consumers, but bad for the health of our industries which are struggling for revival.

We need to adopt a spirit of self-sustenance as a nation through stimulation of local consumption. In turn, we will be endeavoring to do our part to stimulate job creation. This demands that we hire local candidates, offer then appropriate training, purchasing local goods and services or developing the local economic base by supporting small and medium-sized businesses. Genuinely we have the obligation to strive to provide real support to small and medium-sized businesses operating in our economy. Our prime aim is to create and save jobs, consolidate the local integration of our activities and contribute to the development of the local economic base.

In all cases, we have to emphasize a pragmatic, gradual approach to ensure economic revival. This is the only way we can enable Zim ASSET to succeed. Surely this one should be a culture, rather than a manipulative economic strategy. We should bear in mind that local economists believe that about 7 billion dollars, which exceeds the 4 billion dollar national budget, are circulating on the informal sector. Therefore, if we commit ourselves to buying local products, certainly we will transform our economic fortunes.

The Minister of Industry and Trade,  Mike Bimha should step up effort to negotiate with Old Mutual Zimbabwe to create favourable terms and conditions enshrined within the Distressed Industries and Marginalised Areas Fund (DIMAF) that was set-up with the primary objective of rescuing ailing companies. DIMAF is a potential springboard for many local industries' resuscitation.

It is prudent that Government should legislate promotion of local products by any means possible, even if it means re-introduction of price controls. This is the only way to boost local productivity when local consumption is achieved. Many people would grumble that locally produced goods are too expensive and wrongly priced. That's a genuine fear from consumers. But honestly we need to work hard as a nation again to remove price distortions which disrupt our normal business operations. If we remain adamant we are not going anywhere we remain cry babies. Price controls would therefore save us from unscrupulous business persons.

Price controls restriction can act on either the lowest prices or the highest prices. When the government decides to restrict the highest price that a good or service should be sold at in the market then this type of restriction is known as the price ceiling. Price floor on the other hand is the restriction imposed by the government on the minimum prices that a goods or service should be sold at in the market.

The government objectives for price control are; (i) to protect consumers from exploitation by the suppliers. This way the basic goods will become affordable to all the citizens, (ii) to control the rate of inflation in the economy, (iii) to ensure that there is no gouging when there is shortage in supply. Price gouging is a term used to refer to the action of the producers to increase the prices of commodities to unreasonable levels.

Price controls have the following merits: (i) Setting the maximum prices will protect consumers from exploitation because prices cannot rise above a certain limit. This way the consumers purchase commodities at lower prices, (ii) Setting the price limit above a certain point will help the producers to increase their production proceeds, (iii) Price control eliminates transaction costs in production. This is done by minimizing the cost incurred in doing business among the companies hence eliminating the unnecessary costs in production; (iv) Price control brings in transparency in pricing of commodities. Government will have set the maximum or the minimum prices for a commodity, therefore, creating awareness in the economy on the prices of different commodities and (v) Price controls will eliminate the uncertainty caused by the fluctuation in the exchange rates.

However, on the contrary, price control has a disadvantage of reducing the supply of commodities in the market. The supplier's profits are reduced by the price restriction, therefore, driving out some suppliers out of the markets.