We are now about to conclude the 4th week of the national lockdown. So many things have changed in this period and the period has been replete with so many developments. One of the most noteworthy ones is that regarding the prices of basic commodities. Given that most people have been stripped of their liberty to earn a living through various informal means, prices have been a major concern.
Astronomical Price Hikes
The lockdown brought about various dynamics. One of them was the reduction in the number of shopping outlets that could be open in light of the restrictions. That is one dynamic which is also closely linked to another one. The statutory instrument (SI) 83 of 2020 stipulated that people could only freely go-to shopping outlets within 5-kilometre vicinities. Those two dynamic created the perfect platform for shopping outlet owners to hike prices. The idea was to capitalize on the customers’ lack of options due to restricted movements.
Thus, it became commonplace to find shopping outlets in residential areas charging way more than shopping outlets in the central business district (which normally lie outside the stipulated 5-kilometre radius). This has led to people braving it out to go to central business districts in search of cheaper commodities. The price hikes have also been exacerbated by the reintroduction of the use of the US dollar as legal tender. This has created a scenario where shopping outlets, particularly in residential areas, charge high prices when one is paying using bond. The idea behind that has been to discourage the use of the local currency preferring US payments instead.
Shops Have Been Emptying Amid Price Surges
The emptying of shops is a phenomenon that was obviously going to be inevitable. There is a double jeopardy in that both Zimbabwe and South Africa are under lockdown. That also includes other strategic neighbouring countries such as Botswana. These are both countries that are central to the supply chain of most business players locally. The lockdowns, which have been extended, have led to scenarios where stocks are dwindling with no way to replenish them.
Some of the key products that have been running out are basic consumer goods such as food items and medication. South Africa is the leading trading partner that Zimbabwe has so it being on lockdown is a nightmare for local businesses. Ultimately consumers have now had to contend with two hurdles namely, scarcity of products and exorbitant prices.
Government Sets Crop Producer Prices
Effective 1 April, government has decided to increase the producer prices of maize, traditional grains and soya beans. These new producer prices are for the 2020 to 2021 marketing season. The new prices are as follows, maize (ZWL$12 329 per metric tonne), traditional grains (ZWL$12 865 per metric tonne) and soya beans (ZWL$17 211 per metric tonne). It is worth noting that producer prices for maize and traditional grains during the 2019 to 2020 marketing season were ZWL$6 958 and ZWL$7 260 respectively. There exceptions for Merrylene Farm and Tongaat Hulett. This is because they delivered their crop prior to April 2020.
Government Agrees on Price Moratorium
On Wednesday Vice President Kembo Mohadi held a press conference. Part of his press statement read as follows, “The multi-sectoral stakeholders committed to a price moratorium to operate based on prices that were applicable on March 25. The moratorium will also apply to all value chain players. The lockdown resulted in a number of businesses closing and a few that remained operational cannot restock since the movement of vehicles and people is prohibited.”
We are all too familiar with the impotence of governmental price controls. In as much as some business will be seeking to profiteer most will actually be battling to stay afloat. Given that this a time of lockdown it is imperative that the government puts in place rescue packages or cushions for businesses. Otherwise, enacting price controls does not fully address the fundamental issues of concern.
So this is a snapshot of what has been and is happening in Zimbabwe. We might be seeing more upheavals in the commodity pricing spectra if the government does not come up with the rescue or safety nets I mentioned earlier. Measures have to be put into place because the status quos locally and in South Africa are somehow pointing to yet another lockdown extension.