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.
Hotels in Harare charge $15 to $20 for a breakfast that is absolute madness
The government should look into its own pricing model. We pay a lot to government and get nothing in return. ZANU destroys value quicker than the rest of us can create it.
Well said JT! What business would want Mike Bimha shoving his nose into their business model? “The better to tax you my dear. It will be painless if you just relax.”
PLEASE THIS GOVERNMENT BLEEDS ITS INDUSTRY AT EVERY CORNER ,IT MAKES IT VERY EXPENSIVE TO HAVE YOUR OWN COMPANY.AND THE TAXES ARE JUST TO HIGH AND THE INEFFICIENCIES IN ELECTRICITY,WATER AND LISCENCES FOR EVERYTHING ARE RIDICULOUS.EVERY GOOD BUSINESSMEN KNOWS WHAT HAS TO BE DONE ,BUT AS USUAL THE GOVERNMENT OF THE DAY WILL NOT LISTEN.
reduce govt taxes and improve govt efficiency..stop excessive govt interference and cut out the patronage system….
and recognize all citizens as Zimbabweans…
5 years to realize this? Wow. For a start salaries are too high specially in a bloated govt. “clusters” = high tax, high rates, high rents. Labour costs are too high and can’t fire non-productive workers such as ladies who do the rounds “beneficiating” from maternity leave allowances -designed tor political reasons, of course. 3. Bus must buy generators water tanks etc. cause govt can’t provide these basic necessities. 4. Cost borrowing capital excessive. 5. Govt gives Chinese duty-free allowances while taxing local formal formal sector to death. 6. Cost of corruption. Etc, etc. and this minister needs to engage a consultant? Who is this “consultant”. And how much is he/she /it being paid? Zim asset a lot of nonsensical meaningless jargon. If you are serious about fixing the economy talk to the people trying to run businesses. Tax informal sector, Bimha. Stop wasting tax on visiting other “models”. Look at yourselves first. And forex earned by pvt sector belongs to pvt sector – earn your own fx.