Source: Command Economics has never worked anywhere – NewsDay Zimbabwe October 19, 2019
PRESIDENT Emmerson Mnangagwa’s presidency continues to deflate ordinary people’s hopes as he appears completely out of touch with what is happening on the ground as seen by the unwarranted threats he issued to business.
Zimbabwe is currently an unfavourable place to do business because of Mnangagwa’s “trial and error” economic policies that have not done anything to improve the country’s economy, which is now far worse than when he swept to power on November 27 after a military coup that ejected the late long-time ruler, the late Robert Mugabe.
Business people do not just wake up and arbitrarily increase prices, as these are determined by market fundamentals. The threat to “whip business into line” is not going to improve the economic situation in the country. It will, in fact, worsen it. The Mnangagwa administration needs to depart from its “command” approach because it will not work — just like it never worked under Mugabe, but only impoverished the population more.
Mnangagwa’s admission that he did not understand why there was continuous rise in prices, simply shows he is either lights out on economic fundamentals or his ministers are misleading him.
Prices are determined by market forces. If those selling goods have to import them and cannot access foreign currency from the banks, they will do so on the black market to keep their business afloat, and that consequently means they would factor the cost of the foreign currency in their pricing models.
Government simply needs to admit that the local currency has failed, just like they were warned when they first introduced the bond note. And as long as they do not attend to the fundamentals, threatening business will only trigger shortages of basic commodities. Business will simply close shop because they cannot be forced to sell their goods at sub-economic prices for political expediency.
Confidence plays a huge part in people making business decisions and it is without doubt that Zimbabweans from all walks of life have no confidence in the local currency or this administration’s ability to deal with the current economic crisis. All this means Zimbabweans have to pay for the risks businesses are taking to do business in this country. It means higher prices.
It is common knowledge that corruption has been a major drain on the economy, and government efforts so far to fight it have not proved genuine, especially because some of those fingered have very close ties to the President.
It is strange that Mnangagwa’s presidency is associated with threats and the striking doctors are his latest victims. It is now obvious that the government’s failure to grasp basic economics stems from Mnangagwa’s inability to understand that he doesn’t have the power of God to perfect situations by command and that he needs the finesse of a diplomat.
Every day and with each new crisis, Mnangagwa’s reformist mask slips away and the true colours come out. Doctors do not need external forces to incite them to demonstrate for what they think is right.
We do hope Mnangagwa’s forthcoming meeting with the business community will help him appreciate the challenges they are facing and that the buck stops with him.