Happiness ZengeniÂ and Conrad Mwanawashe
RESERVE Bank of Zimbabwe Governor Dr John Mangudya has advised industry to consider a downward adjustment of their prices in line with new policy measures adopted by the Government.Zimdollar bank balances, the central bank chief said, would be demonetised by June 30.
In his Monetary Policy Statement under the theme: âRebalancing the Economy Through Competitiveness and Complianceâ yesterday, Dr Mangudya said $20 million would be set aside for the demonetisation.
Although the modalities of the demonetisation will be announced in due course, Dr Mangudya said all genuine or normal bank accounts, other than loan accounts, as at December 31, 2008 would be paid an equal flat amount of $5 per account.
âThe then prevailing United Nations (UN) exchange rate will be used to convert Zimdollar balances that were as a result of arbitrage opportunities âburningâ and for Zimdollar cash to be received from the walk-in banking public,â said Dr Mangudya.
âThe significance of this policy measure is to bring finality to this long outstanding Government obligation to the banking public and to formally pronounce the demise of the local currency.â
Dr Mangudya said competitiveness of the national economy was not achievable without addressing the national economyâs cost drivers.
âThese cost drivers include, but not limited to, municipality tariffs, environmental management fees, and some non-tariff barriers,â he said.
âSuch fees and/or tariffs increase the cost of doing business in Zimbabwe. It is against this background that we applaud Cabinet for setting up the National Competitiveness Commission mandated to critically interrogate the national pricing structure in order to come up with a more competitive model of doing business in the country. The commission will, therefore, need to redouble their efforts to ensure that the deceleration of prices which are in their sphere of influence is realisable within a short space of time.â
The commissionâs initial efforts should focus on utility prices, especially electricity, water and licensing requirements.
Dr Mangudya said most farmers, for example, were saddled with electricity bills because the tariffs were not competitive, especially on agricultural produce whose prices were not only low, but sometimes even difficult to sell as merchants substituted local goods with imports.
Mining and other sectors are facing the same fate on utility tariffs.
Landlords would also need to adjust their rentals, especially in high- density areas where a room costs on average $70 per month.
In order to provide solutions to the economic challenges, a two pronged approach would have to be implemented; enhancing confidence and production capacity and liberalisation and monitoring of foreign payments.
Dr Mangudya said addressing the welfare of workers and consumers in general from a cost reduction point of view would also assist businesses in that their products would become competitive against imports.
He said after fuel suppliers reduced prices by around 10 percent recently, consumers were expecting the same to happen to almost all the prices.
âThe same is true for basic commodities which go into consumer basket, such as bread, tea, cooking oil,â said Dr Mangudya.
âBusinesses will need to review prices of such commodities. It is failure or bad faith by business to quickly review prices downwards that influences workers to demand higher wages and salaries.â