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Mnangagwa faces ZANU PF Conference price headache

29 Nov 2019 at 06:12hrs | Views
The President heads to a ZANU PF National Conference where the issue of prices is set to take centre stage as prices affect the proverbial bread and butter issues.

The President will have address the ZANU PF structures on prices and the way forward. The affordability of basic commodities is a national security and political issue which requires wisdom and collective effort.

Minister Mthuli Ncube is in a quagmire as he seeks to keep inflation within reasonable levels while managing the difficult task of de-dollarisation. Prices remain the greatest challenge which must be collectively addressed by government, industry and retailers.

The people want prices to come down and match Incomes, this is a reasonable and fair need which the President will most likely address during the ZANU PF Conference.

Presidential Advisors have let the President down on prices and the economy. Equally some statutory bodies such as the Competition and Tarrif Commission have also let the President down and are not aiding towards the realisation of Vision 2030. Party Structures are likely to voice their concerns and the youth league has set the ball in motion, war veterans are likely to add their voices on prices as well as the women's league.

The affordability of basic commodities remains at the centre of industrial action by labour movements. The masses responded loudly to the removal of Grain Subsidies which caused a sharp rise in the price of mealie meal. The President had to step in and restore calm, the impact assessment of the subsidies move probably sent chilling waves down the spines of politicians.

Price Controls?

The ZANU PF Youth League is calling for a state driven process of price regulation and controls. These calls are growing louder by the day as party structures respond to the cost of living and prices of basic commodities.

State sponsored price controls and regulation go against the "open for business" mantra that has been championed by the Second Republic. The government has stood firm on its ease of doing business and de regulation, price controls and regulations would be a sign of inconsistency which President ED Mnangagwa cannot afford at the moment.

The public do not want to be reminded of the food shortages of the 2006-2008 period and the results of price controls.

Industry requires autonomy for it to operate profitably, state sponsored price controls would take away that autonomy. While autonomy is key, industry also needs to be responsible, compassionate and empathetic to its customers who are under pressure to survive these tough economic times.

Competition and Tarrif Commission asset or liability to the Second Republic?

The Competition and Tariff Commission ("Commission") is a statutory body that administers the Competition Act [Chapter 14:28] (the Act), mandated to promote and maintain fair competition in all sectors of the Zimbabwean economy. The question needs to be asked, who is the Competition and Tarrif Commission serving, are they an asset to the Second Republic or a liability?

The Commission has stood against manufacturers producers who published recommended price ranges within which retailers/wholesalers must trade their goods/services. Price recommendations are nothing new or out of the blue, coca cola does publish recommended prices for their products and have them inscribed on their refrigerators and that has never been a problem for the commission.

Recommending prices is strategic for the manufacturer and producer who need their products bought so that they can go back to production. Price recommendation by manufacturers and producers  cushions consumers from likely exploitation by unscrupulous retailers. Retailers are loyal to profits, profiteering is not a crime, however unreasonable profit margins are a tool for economic sabotage which is the worst form of evil that is worse than sanctions.

Manufacturers and producers need to do what is noble for their consumers. The competition and Tarrif Commission is against price recommendations when it comes to mealie meal and grain products. Their argument is that the price recommendation initiative can be used as a platform of operationalising a cartel. Their decision and opinion ignores the fact that grain has a subsidy from government, at a set threshold, who is there to ensure that the subsidy is fairly passed on to the consumer?

How does the Competition and Tarrif Commission ensure that the government's investment in grain subsidies is fairly benefiting the people within the parameters of the competition act.

The Zimbabwe Energy and Regulatory Authority ZERA sets and recommends fuel prices, the Competition and Tarrif Commission has not come out against ZERA and the fuel sector, the sector enjoys special investment from government in a bid to keep fuel within the consumer's reach. The same should be allowed for basic commodities.

Industry self regulation and monitoring

The Competition and Tarrif Commission needs to be proactive and creative in line with the economic developments and challenges in the economy.

The Competition and Tarrif Commission needs to allow, promote industry self regulation and price monitoring or recommendation, while creating mechanisms to ensure that these measures are not used to operationalise cartels.
Industry needs to be responsible and transparent where subsidies are concerned. Subsidies are tax payers funds, whose benefit needs to be enjoyed and shared by all transparently. Price recommendation and monitoring for mealie meal and bread are a necessity. These commodities have the potential to influence price hikes across the economy, which is why the President had to step in immediately on grain subsidies.

The Competition and Tarrif Commission should take the cue from the President and also play their part. The challenges we face demand action and not explanations, the Second Republic is an action oriented Republic that prioritises results for the People's benefit.

The Grain Millers Association needs to be proactive and cooperate with the Competition and Tarrif Commission to develop a workable price monitoring and industry self regulation mechanism that ensures that grain subsidies are passed on to the people, and they enjoy the benefits of competitive prices.

The GMAZ price monitoring program is a necessary process which might be the best compromise to the price control debacle. The issue of prices is a headache for the President which must be solved through collective effort.

The Competition and Tarrif Commission needs to relook its decision on the GMAZ price monitoring and industry self regulation initiative. Price hikes are a tool for economic sabotage, the Second Republic should not allow run away price hikes. There is need for action without stifling business' autonomy. Industry needs to be responsible, and self regulation is part of being responsible, the Competition and Tarrif Commission needs to be part of the process for the benefit of all.
Nicholas Ncube
Secretary General
Bulawayo Business Network

Source - Nicholas Ncube
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