The Grain Millers Association of Zimbabwe (GMAZ) and the Confederation of Zimbabwe Retailers (CZR) have signed a Memorandum of Understanding (MoU) to monitor the prices of basic commodities.
Under this agreement, 150 officials will be dispatched to go around the country checking on what retailers are charging customers. Speaking during the signing ceremony, GMAZ Chairperson Tafadzwa Musarara said, “The country is under siege regarding price increases, especially on staple foods. Since we are responsible for the production and availability of staples with the inclusion of mealie meal, we have come up with a self-regulatory mechanism of dispatching 150 personnel to different retailers countrywide for monitoring of prices.”
Prices of basic commodities have been rising since October 2018 and although the government has advised that it is reluctant to introduce price controls, things are spiralling out of control. In fact, President Emmerson Mnangagwa hinted in his Workers’ Day message that his government may be forced to consider price controls if businesses continue charging unrealistic prices. However, it looks like GMAZ and CZR have decided to be proactive on this one.
“We realised that retailers were not sticking to the agreed-upon prices of basic commodities and noticed that without monitoring these prices, the stipulation is not enough. So, 150 personnel will be dispatched countrywide to assess compliance. Where none compliance is obtained we shall ask the retailer to adjust their prices and failure to do so we will stop supplying them,” Musakarara said.
Effectiveness
It is not clear if this move will be effective in curbing price hikes. On their part, businesses feel that they are justified in increasing prices for a number of reasons. Firstly, the exchange rate between the RTGS dollar and other major currencies like the US dollar keeps rising even on the Interbank Foreign Currency Exchange Market. Foreign currency supply is still failing to meet demand and many have had to look to the parallel market for the much-needed forex, although this is illegal. For those who rely on imports, this is a genuine justification to increase prices.
Secondly, prices of raw materials are also increasing and manufacturers feel that their products need to be priced accordingly. This tends to fuel price hikes all around. However, some of the prices are clearly outrageous. But, for GMAZ and CZR to to cut supplies may not be a viable option. Retailers may decide to procure their goods abroad to avoid these measures. An influx of imports will bring about unwanted competition at a time when the government is preaching import substitution. In short, without government intervention, it looks like this exercise is in vain. The introduction of government-backed shops which will sell goods at subsidised prices is a noble idea, but, one that must be introduced cautiously as previous attempts like Bacossi have failed to deal with the underlying issues.
Certain fundamentals need to be sorted out if price increases are to be stopped once and for all. And, these fundamentals are the preserve of government and no one else.
