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Competition and Tariff Commission under fire

17 Sep 2019 at 12:07hrs | Views
The Competition and Tariff commission has once again come under the spotlight as prices sky rocket. While it is said that the Competition and Tariff Commission is not legally mandated to deal with prices issues it is disheartening that they used their power to bar the Grain Millers Association from engaging in price monitoring and self regulation within the Grain industry.

Zimbabwe is currently surviving on less than 50% of the desired 120 000 metric tonnes of grain required. There is basically no competition and no monopolies as grain is in short supply though they refused to allow self regulation on the basis that it would stifle competition and create cartels.

The dilemma
Government is caught in a difficult position, President ED Mnangagwa has declared that he will not use heavy handed approaches in dealing with prices though he expects the business community to be fair and just in their pricing models.

Government has to protect the consumer who also happens to be the voter and subsequently the government's employer. At the same time government needs to allow free markets and allow business to thrive. The best way would be for a peer monitoring and review mechanism to ensure that prices are not over inflated and protect consumers from the band wagon of profiteers.

Peer to peer monitoring can only happen within sectors and under the ambit of organisations and associations such as CZI, ZNCC, GMAZ etc. If the Competition and Tarrif Commission bars the associations from peer review and monitoring then are they implying that price controls are the best foot forward? Whose side is the Competition and Tarrif Commission on?

The President has to intervene and issue a directive to allow self regulation and peer monitoring. The leaders of the associations can then engage with policy makers to ensure that government creates a conducive environment for the decrease in prices.

Ultimately industry and business cannot be left to be a law unto themselves in the pricing area. Business is after profit at all cost even if it means at the financial  suffocation of the masses.

The exchange rate

While it is understandable that the exchange rate has gone up the prices remain unjustified, unmonitored and have gone beyond the reach of many.

The exchange rate is galloping and the Reserve Bank needs to reintroduce subsidised forex for key industries such as grain, fuel and medicines. Subsidised forex helps cushion the consumer.

While industry is right to respond to the exchange rate there should be limits to profit margins to ensure that all things remain fair and just to the consumer. The competition and Tarrif Commission surely has a mandate towards ensuring that profit margins are competitive without exploiting the people, and they are quiet on that front.

Civil Servants to demand fresh wage increase

The recent wanton price increases are likely to trigger fresh demands for wage increases particularly from the Civil servants.

Wages went up by 76% because that is what government can afford at the moment, prices went up by 100-150% because that is what industry says is fair. A loaf of bread at $9 that is really absurd, a civil servant would need to spend $270 on 30 loaves of bread per month and that is already half of their salaries. Competition and Tarrif Commission does not care because they say it is not their mandate yet they will stop those who care and are implementing self regulation mechanisms.

The Competition and Tarrif ban on GMAZ self regulation and industry's reaction

The Competition and Tarrif Commission barred the Grain Millers Association from practising self regulation and monitoring which kept prices of grain within the reach of the populace.

Speaking on the issue of prices, and how they are impeding the vision of the new dispensation Mr Ruzvidzo of the Confederation of Zimbabwe Industries CZI said " with the challenges that we are facing which are unusual, we need to introspect, and go back to the basics and do what works".

Mr Ruzvidzo praised the initiative by Grain Millers to self regulate and said there is need for a discussion on how to make the model work without infringing on the issues of competition.

Speaking on the same issue Dr Eve Gadzikwa was of the opinion that Zimbabwe needs a change management program right from the top to the last man at the bottom to ensure that Zimbabwe realises the vision of the new dispensation.

Contacted for comment, Fidelis Fengu a known ZANU PF activist and socio political consultant based in Malawi was of the opinion that the Grain Millers Association price monitoring model must be given a chance as it is the best foot forward towards protecting consumers. He said that price controls from government would remind us of the  2007-2008 era.

Fengu highlighted that the GMAZ price monitoring model must be promoted and encouraged. He urged the Competition and Tarriff Commission to allow the model space and chance to do what the CTC is failing to do. "This self regulation model should be sold to CZI, ZNCC, Retailers and all associations so that they can engage in peer to peer monitoring and regulation on pricing issues, its nothing new doctors do the same and other professionals, why not bring it to industry and retail to protect our people from wanton price increases", said Fengu.
Pressure is mounting on the government to act as prices have gone up by over 120% in the past 2 weeks. The Competition and Tarrif Commission remains quiet on price hikes and the Consumer Council of Zimbabwe is no where to be found. The question then becomes who is fighting in the corner of the ordinary citizen?

Hopefully the Minister of Industry and Commerce will step in and defend the people of Zimbabwe from financial abuse and profiteering.

Will the Competition and Tarrif Commission respond? Do they care about the plight of the people? Is Minister Mangaliso Ndlovu aware of the price increases and does he know that people are suffering? Will the minister intervene? Will President ED Mnangagwa intervene?

Nicholas Ncube
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Source - Nicholas Ncube
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