More company directors arrested over prices as factories close

By Lance Guma
19 September 2006

The assault on the operations of manufacturers by police continued Monday with the arrest of three more company directors over price increases. Senior managers from Windmill, Circle Cement and Zimbabwe Fertiliser Company (ZFC) were picked up by police for allegedly increasing prices without government approval. This brings to 6 the total number of company directors arrested after milk supplier Dairibord, bread maker Lobels and Saltrama Plastics all had their top bosses arrested over the weekend.

The price of basic commodities like bread, milk, cooking oil, sugar and maize meal all shot up last week but the latest price clampdown has only resulted in the products disappearing from the shelves. Most bakeries in the country have had to either shut their factories or stop making bread altogether, because of increasing operational costs. The National Bakers Association have argued that raw materials have increased by between 60 and 289 percent in June this year and the price of Z$200 a loaf was not sustainable. Its feared several bakeries might close down if government persists on trying to impose the controls.
Saltrama Plastics, which supplies bakeries and retailers with packaging plastics, is reported to have closed its factory as the government ordered price is not viable for them. Fertilizer prices rose by 100 percent and the manufacturers say this has been caused by a 300 percent increase in the cost of transporting ammonium. Last week officials from the major fertiliser suppliers issued a statement explaining that their price increase were a response to the increase in the cost of rail transport. A 50 kg bag of ammonium nitrate rose from Z$2 200 to Z$4 400 while Compound D fertiliser now costs Z$5 200 per bag.
Economic commentator Erich Bloch told Newsreel ‘prices controls have never succeeded and will never succeed, whether it’s in the former Soviet Union or Cuba.’ He says government needs to address the root causes of inflation if they want to control prices. Bloch says costs are escalating at a tremendous pace and this was creating viability problems for manufacturers. He gave fuel as an example, saying there was none available at the official price of Z$335 per litre and that companies were buying it for Z$830 per litre on the black market. This he says results in companies having to factor the black market prices into their selling price.
Meanwhile on Monday, Harare Magistrate Paradzai Garufu slammed the unlawful arrest of the first trio of directors over the weekend. He says the police were over-zealous in their actions and that a distinction had to be made between the company and the directors as individuals. Benson Samudzimu (Dairibord), Edward Madza (Saltrama) and Lemmy John Chikomo (Lobels) all appeared in court. Advocate Eric Matinenga and Don Moyo are representing the trio who were all released on free bail.