Govt looks into firms’ pricing models

via Govt looks into firms’ pricing models | The Herald June 27, 2014 by Martin Kadzere

Government is studying companies’ cost structures across all sectors to find out how firms are developing their pricing models, Industry and Commerce Minister Mike Bimha has said.
This will help the Government to come up with policies to curb imports and put in place measures to help the industry to operate competitively.
Local companies are failing to meet local demand and most household goods are being imported mostly from neighbouring South Africa.

Officially opening this year’s edition of the Zimbabwe National Chamber of Commerce congress, Minister Bimha said the study would also be extended to regional countries to establish the cost structures of regional manufacturers and how their pricing models are developed.

“Government has realised that our cost of production is high which results in other products coming here priced cheaper than the products that we make,” said Minister Bimha.

“My ministry has been tasked by Cabinet to carry out a comprehensive study into what constitutes the cost of production across the sectors as a way of finding out how pricing models are developed.

“Not only that, we are also supposed to go and look within the region and make a comparison on how they arrive say at a price of a bag of fertiliser in South Africa. We have been joined by a consultant and we are hopeful that this study will help Government to come up with a policy (on curbing imports).

“Like any other country, we would want to support our local manufactures but we don’t just want to support them for the sake of supporting. We want to support (the local manufactures) so that they can produce competitive products, in terms of both price and quality.

“There is a general concern over the pricing structure of local companies with some analysts saying the prices are ‘unreasonably high’, blaming this on the ‘Zimdollar mentality’ some businesses still have.”

But manufacturers have argued that high costs of production are resulting in higher prices of goods they make compared to regional products.
Last year, Vice President Mujuru told an exporters’ conference that Government was considering measures to ensure a rational pricing system in the wake of serious concerns over high prices of local goods and services.

Minister Bimha said Government emphasis was on value addition and local production to create jobs than relying on imports.
“To that end value addition and beneficiation is one of the key clusters under Zim-Asset. My ministry together with the private sectors and development partners has crafted a leather strategy and work is also underway to come up with a cotton-clothing strategy.

“These strategies should help in increasing value added industrial output in the respective sub-sectors,” he said.
The minister added that Government has also put in place an advisory committee on imports and easy of doing business to come up with friendly policies.

Minister Bimha also noted that notwithstanding the positive gains realised in addressing the macro-economic challenges, the economy remains “fragile”.
He said the debt overhang was also preventing the country from accessing lines of credit from multilateral financial institutions such as the World Bank.

“To bring life back into the economy, fresh capital injection is evidently required. Zimbabwe requires substantial capital flows to underpin economy wide recapitalisation, overhaul the antiquated machinery which are teeming if factories, replace technologies of decades ago with new technology and revamp our infrastructure,” said Minister Bimha.

Earlier, the ZNCC president Hlanganiso Matangaidze told the delegates attending the congress being held under the theme “Transforming Economic Blueprints into growth” that the economy was stuck in an untenable low equilibrium position characterised by local capacity utilisation, low levels of unemployment and low investments rates.

He however, noted there was need to rebuild confidence to attract Foreign Direct Investments. About 150 delegates including senior Government officials are attending the two-day conference which ends tomorrow.