Government, business agree on pricing model

Source: Government, business agree on pricing model | Sunday News (local news)

Dumisani Nsingo, Senior Business Reporter 

THE Government and business community have agreed to come up with a pricing model for most basic commodities with efforts underway to stem the galloping prices that keep on eroding people’s purchasing power. 

As prices of goods continue to increase in most shops, there have been increased calls from the people for the Government to intervene and reprimand the business community. Industry and Commerce Minister Mangaliso Nqobizitha Ndlovu who met the business community and captains of industry on Wednesday last week told Sunday News that the business community has drafted a number of proposals around pricing which will be looked at by the Government. The country has experienced a wave of wanton price increases of commodities over the last few months, most of which have been attributed to business pegging their prices against the parallel market foreign exchange rates. 

“The primary issue of the meeting was the prevailing economic situation. There were concerns around the issue of pricing and exchange rate and most importantly we came together to see how best we can navigate through these challenges and they (business community) requested for a day or two to go back and sit down and come up with comprehensive proposals and recommendation, which might have been sent to my office by now,” said Minister Ndlovu.

Minister Ndlovu said the business community has always expressed willingness to work with the Government on issues of economic development.

“We work together on a number of issues and that’s the reason we always call them and that’s how we have chosen to approach issues. They are always willing to work with Government. Of course we don’t always agree on finer issues but on broader policies we are together. They always make recommendations and for your own information the introduction of the inter-bank market was a proposal from the business community so we always interact with them for the purposes of finding solutions to our challenges,” he said.

Reserve Bank of Zimbabwe governor Dr John Mangudya introduced the inter-bank when he presented his 2019 monetary policy in February and at the same time introduced local currency (RTGS). While it was expected that the interbank would resolve issues around allocation and shortage of hard currency, it got off to a slow start as exporters tightly held onto their funds amid concerns of perceived low inter-bank rate.

However, the situation changed after the Central Bank instructed banks to allow willing buyer-willing seller practice to reflect true market conditions and further stated that banks should ensure that there were no moral hazards in the operation of the inter-bank foreign exchange market.

As part of creating a conducive environment for business to operate, the Government guarded against intentions of either introducing price controls or “punishing” profiteering businesses. Price controls have proved to be undesirable in the past as they result in disappearance of commodities from shop shelves and the emergence of the black market.

President Mnangagwa is also set to meet the business community soon to address the same issue. Addressing the nation, a fortnight ago, President Mnangagwa said the issue of prices was creating a situation which has become completely unjustified and untenable when only prices of basic commodities continue to escalate against static or even declining wages.

“Surely a generalised price escalation should and must have a bearing on wage levels in the economy. We urge our business community to show leadership by taking business decisions which are professional, ethical and even compassionate. They must act in a manner consistent with the broader goal of economic recovery, tripartism and sustainable long-term macro-economic stability,” said President Mnangagwa.