Bakers shut down as government insists on controlled prices

By Tererai Karimakwenda
22 March, 2007

The baking industry has announced that they are operating at only 30% capacity and have laid off many workers as a result of the government’s ongoing price control exercise. Vincent Mangoma, acting chairman of the National Bakers Association (NBA) said the majority of bakers have closed because the cost of inputs for baking bread has increased so drastically the industry cannot cope. He said those still in operation have had to downsize and cut back on staff. Thousands have lost their jobs and serious bread shortages have developed around the country. Mangoma explained that it currently costs well over Z$5,000 to produce a loaf of bread yet the government wants them to charge just Z$700. “It’s like asking bakers to subsidise consumers,” he added.

The so-called price wars between government and private industry are forcing many businesses to shut down. The most recent victim is Superbake, one of Zimbabwe’s largest bakers. According to The Financial Gazette, Superbake announced Wednesday that it had laid off 1500 workers after closing half its bakeries.

Asked whether any negotiations were taking place to resolve this urgent situation Mangoma said: “We normally deal with the Ministry of Industry and Trade and I’m aware that the issues were discussed, a resolution was made. A recommendation to the ministry was made and the minister was supposed to take the issues forward. I don’t know whether it is to the cabinet or wherever but that’s as far as the issue went.” Meanwhile bakers have tried to cut corners to stay in business. Mangoma said this has resulted in a serious deterioration of standards.

This ongoing insistence by the government to force unreasonable price controls on private businesses while inflation continues to soar has made it impossible for most businesses to stay afloat. The Price Control Unit takes a long time to approve applications and the prices sought by business change by the time they get permission. Providers of basic commodities are forced to hike their prices in order to continue to exist.

The Financial Gazette reports that the managing director of United Refineries, Busisa Moyo, was this week briefly detained by police for allegedly flouting price controls. Moyo was arrested on Monday by agents from the Licence Inspectorate and Price Control Unit who accused him of increasing the price of cooking oil without permission from government. According to The Financial Gazette, this was the second time this year that he has faced such charges over pricing. The first time he was released after a court ruled the charges against him were not in order.