President Emmerson Mnangagwa and service chiefs inspect a guard of honour mounted for them at the National Sports Stadium in Harare to mark the country’s 39th Independence Day celebrations
BY BLESSED MHLANGA
A FIGHT looms between government and business over a new wave of price hikes, which President Emmerson Mnangagwa, in his Independence Day speech yesterday described as unethical, unpatriotic and inhumane.
Mnangagwa warned business that the price hikes will be dealt with as his government seeks to forcibly restore the purchasing power of workers’ salaries eroded by rampaging inflation.
“Government is alarmed by the recent wanton and indiscriminate increases of prices which have brought about untold suffering to the people. This conduct by stakeholders in business, industry and commerce is inhumane, unethical, unpatriotic and goes against the grain of economic dialogue which the Second Republic has espoused. Government remains determined to restore the purchasing power of all workers,” Mnangagwa said.
Government recently floated the real time gross settlement dollars (ZWL$) rated against the United States dollars, removing an artificial 1:1 exchange ratio to allow free trade of the currency on the formal market.
The local currency has been taking a beating both on the interbank market where it closed the week on US$1:ZWL$3,2 and the black market at 1:5. This has pushed prices of basic commodities through the roof, eroding disposable incomes.
Mnangagwa’s government has threatened to introduce “people’s shops”– common in struggling communist countries – small-scale bakeries and whipping systems to bring the prices in tandem with the poor salaries workers are forced to take home.
“Wheat supplies are set to improve, while the establishment of small-scale bakeries will be facilitated to enhance more affordable bread prices. Thesetting up of Silo Foods Company will further see increased availability and affordability of many basic commodities throughout the country,” he said.
Former President Robert Mugabe tried to whip businesses into reducing prices at the height of inflation, but failed to win the battle as shop shelves ran empty and basic commodities were traded on the black market.
Zimbabwe, already facing an economic meltdown is suffering acute fuel shortages and could face a new wave of price increases as the ZWL$ continues to lose value, making the current fuel prices unsustainable. Mnangagwa said his government had an alternative plan to circumvent the challenges.
“In the fuel sector, we are adopting long-term strategies to stabilise both the availability and pricing of the product.
“The introduction of a market-based exchange rate system is expected to stabilise the economy, in the long run,” he said.
Facing a serious food shortage owing to a drought, Mnangagwa assured the nation that strategic food reserves will be deployed to ensure that all Zimbabweans are fed and will not go hungry.
“As a result of this year’s drought, considerable quantities of grain in our strategic grain reserves will be availed so that no-one dies from hunger,” he said.
The speech delivered under heavy rains which pounded Harare, covered all sectors of the troubled economy, politics, sport and business.
Soldiers, police, prison guards and airforce personnel who mounted the independence guard of honour endured almost two hours of heavy rain and left the field soaked to the kilt.
The thing to deal with is the interbank forex rate. Large business is killed by small business, the guy on the street corner who sets the parallel market rate, which the interbank rate follows at a distance impacting everyone else, including big business that must now write down serious exchange rate losses. Then the other thing to deal with ir RTGS, so that it sticks to its core business of inter-bank bulk transfers, not becoming a quasi currency in the real sense. Finally, ensure there is cash so that not every exchange of cash diluted by 2% when no value has been created. If value is created for no work, expect continued dilution on whatever we decide to call the currency, with or without consensus.
This post coup president, with a new insight into corruption,should sort out his party and the government first before he blames business. He and his ilk have done more damage to the economy than any rattle of businessmen ever did.
COMMENTS
The thing to deal with is the interbank forex rate. Large business is killed by small business, the guy on the street corner who sets the parallel market rate, which the interbank rate follows at a distance impacting everyone else, including big business that must now write down serious exchange rate losses. Then the other thing to deal with ir RTGS, so that it sticks to its core business of inter-bank bulk transfers, not becoming a quasi currency in the real sense. Finally, ensure there is cash so that not every exchange of cash diluted by 2% when no value has been created. If value is created for no work, expect continued dilution on whatever we decide to call the currency, with or without consensus.
This post coup president, with a new insight into corruption,should sort out his party and the government first before he blames business. He and his ilk have done more damage to the economy than any rattle of businessmen ever did.