Dumisani Nsingo , Senior Business Reporter
THE Government will continue to explore various measures and strategies of ensuring that consumers are not subjected to wanton price increases by unscrupulous businesses, a Cabinet Minister said.
Addressing the business community of Plumtree on Friday, Industry and Commerce Minister Nqobizitha Mangaliso Ndlovu said over the years the Government has underestimated the country’s economic size, culminating to the prevailing rampant commodities shortages.
“The country’s economy experienced a growth without us (Government) taking note, there is what is called rebasing, every five years a country should take note how it’s GDP (Gross Domestic Product) is performing and when the Minister of Finance (and Economic Planning Dr Mthuli Ncube) was appointed in these last two months he decided to do an advent of rebasing . . .
“It was discovered that we always told ourselves that our GDP was around $18 billion while it is actually around $25 billion.
So over the past five years we are looking at a point that we have grown about 40 percent meaning that there is strain, which we weren’t aware of including the way we were planning (the trajectory of our economy). We only realised when there were unending fuel queues,” said Minister Ndlovu.
Rebasing GDP allows Governments to better evaluate their fiscal positions and potential revenue bases while providing investors with more accurate information on which to base their investment decisions. As the economy grows and evolves, GDP measures need to be recalculated to account for the new sectors that are emerging.
Minister Ndlovu said the shortages of commodities that hit the country over the last two months were largely due to panic and speculative buying tendencies.
“There were many (economic misinterpretations) for instance people told themselves that the bond was going to be discarded and this somehow led to panic buying and speculative buying and this culminated to unnecessary goods shortages. However, as a Government we should always be prepared to monitor people’s buying patterns to ensure that they don’t suffer due to shortages,” he said.
Minister Ndlovu said the prices of commodities that had spiralled to unprecedented measures was beginning to normalise, adding that the Government was working tirelessly to rectify the price situation in the country.
“It’s quite concerning that most of the price increases were not justified and just engaging them (retailers) it had positive result, a lot of them have reduced prices. We continue to engage them, we still believe the prices are still high for most commodities and there is no justification,” he said.
Minister Ndlovu said following recent price hikes, which had led to panic-buying and hoarding, Government suspended Statutory Instrument 122 of 2017 (SI 122), to protect consumers and give manufacturers time to restock for the festive season and beyond.
“Ultimately the one at the receiving end is the consumer and the Government won’t fold its arms and let people suffer and we felt it was necessary to temporarily amend SI 122 of 2017 and allow those with foreign currency to import,” he said.
The Minister said the repealing of SI 122 of 2017, which replaced SI 64 of 2016 is expected to play a huge role in ensuring the normalisation of prices by retailers.
“Opening up the market for people to be able to buy even outside borders will have an effect on the price ultimately because the choices are widened, when the choices are widened people would want to compete on the basis of price so these are the options that we will pursue and we believe they will yield results. The decision to open up the borders was to the best interest of the people of Zimbabwe and we will see the benefits of this in the few weeks to come when people are bringing in goods that are likely to be even cheaper than what is prevailing on the market,” he said.
Minister Ndlovu said Government would continue to monitor prices but hinted that it would not put in place any price control measures.
“The Government’s permanent function is to see to it that the business environment is suitable for businesses to thrive and grow that’s why I have been open throughout my statements that Government will not re-introduce price controls because we learnt over years that it stifles business operations. However, we realise that if you let businesses operate without being monitored they tend to effect price increases without justification,” he said.
Minister Ndlovu said the introduction of the import management programme played an important role in improving capacity utilisation at most industries.
“That strategy was very critical for Zimbabwe as we received investment in excess of $60 million of people coming from outside to invest and the figure isn’t closest to what is on the ground, here I am talking about the investments that I have visited so far. We have had capacity utilisation stabilising to the excess of 45 percent and we are expecting that this year it’s going to reach 60 percent, that’s what people in industry are telling me,” he said.
He however, said there was a need for the country’s industries to find a lasting solution to remain viable instead of relying on import substitution programmes, which by their nature are only temporary measures aimed at cushioning them to retool and scale up their production.
“If we tell ourselves our industries can only survive by closing borders for imports to come in, we are not being genuine and we are not going anywhere. We should give ourselves a stipulated period of saying if we are closing borders and at the time we have shut them what should we be doing and what is each stakeholders’ responsibility to be able to say now we can compete with the world because if all countries do what we are doing the world economy will collapse,” said Minister Ndlovu.