Don’t increase prices: Mnangagwa urges manufacturers

VICE-President Emmerson Mnangagwa has called on manufacturers not to increase their pices to encourage the retail sector to buy locally.

Source: Don’t increase prices: Mnangagwa urges manufacturers – NewsDay Zimbabwe November 22, 2016

BY TATIRA ZWINOIRA

There has been a 10% increment from producers, who source their raw materials outside the country, according to the Confederation of Zimbabwe Industries (CZI).

However, a more concrete assessment by the lobby group is yet to be made.

Speaking at the Confederation of Zimbabwe Retailers second annual awards on Friday, Mnangagwa said manufacturers needed to show good-will in order to support local brands.

“I call upon manufacturers to avoid unnecessarily raising of prices, as profitability would be realised, as volumes improve. Also, in order to raise efficiencies and increase profit, manufacturing firms should re-tool and automate their processes. Moreover, the alignment of costs to the size and activity of companies would helpful,” he said.

“This business view is in line with those expressed in your awards this year that are meant to promote honest and fair dealings, and high ethical standards.”

Mnangagwa said the government would continue to facilitate and support business by improving the business climate.
He is responsible for the ease of doing business reforms in Cabinet.

CZI deputy president, Sifelani Jabangwe said the increment was due to the delays for those non-exporting importers of raw materials to suppliers.

He said, as such, a local distributor would have to carry between 10% to 15% price increments to circumvent foreign payment delays.

“So, if there is readily available currency, the prices will go down. There is general argument between manufactures and retailers,” Sifelani said.

“We are finding that for the retailers charging higher margins on products, their justification being they have to finance the infrastructure (supplies from local producers).

“But we are saying mark-ups need to come down. What should happen with SI 64 of 2016 manufacturers should be able to reduce prices because of increased sales.”

He said the increments were not more than 10%.

The price increment has to do with producers, who rely on imported raw materials.

These producers are facing delays in making foreign payments to suppliers due to increased liquidity constraints in the country.

Under the central bank’s foreign exchange priority list, raw materials are listed as a high priority.

Net exporters, who import raw materials or machinery to produce and generate more exports and non-exporting importers of raw materials and machinery for local production, are the only ones who are allocated foreign currency under the priority list.

The non-exporting resource of fuel and cooking oil has caused delays in the payment of raw materials in recent weeks.

“The Vice-President was simply encouraging manufacturers not to take advantage of Statutory Instrument 64 of 2016 not to increase prices to the detriment of the people,” CZR president, Denford Mutashu said.

Apart from SI 64 of 2016, CZI says the manufacturing sector needs $2 billion to fully re-capacitate.