Shops empty after government extends price controls to all products

By Tererai Karimakwenda
28 June, 2007

The government’s Herald newspaper reports that all goods and services whose prices were not previously being controlled or monitored will now be subject to price controls. The chairman of the Cabinet Task Force on Price Monitoring and Stabilisation, Obert Mpofu, said government had extended the controls because of what he called the “continued exploitation of consumers by some unscrupulous businesspeople who had devised methods to evade price controls.” Mpofu said all goods and services that were previously neither controlled nor monitored shall with immediate effect be monitored. He warned that those who do not comply shall face the full wrath of the law.

Businesses cannot keep up with the hyperinflation that is driving up costs and forcing them to increase prices daily. Economic experts have said simply ordering them to reduce prices does not solve the problem. They would be operating at great loss if they complied.

In the capital businesses immediately reacted to the news. Our Harare correspondent Simon Muchemwa said shop owners began emptying their shelves on Wednesday night in order to minimise losses. Describing the atmosphere as chaotic, Muchemwa said he saw truckloads full of groceries and other household products making their way out of town. Crates of Mazoe orange crush and packets of mealie-meal were seen being loaded onto trucks. Muchemwa said the Mazoe bottles that were selling for Z$600,000 were supposed to be reduced to Z$140,000 according to the government directive. Items such as soap, salt and cooking oil, which were already controlled, have been very difficult to find.

Police spokesperson Chief Superintendent Oliver Mandipaka warned businesses that the police would arrest them without fear or favour if they engaged in illegal pricing activities. And police crackdown teams have been deployed countrywide to enforce the new regulations. Muchemwa said the mood in Harare is tense and described the standoff between government and businesses as war.

Muchemwa visited the traditional supermarkets such as OK, TM and Bon Marche around Harare and in the high-density areas. He said none of them were making bread. They had been ordered to sell each loaf for Z$22,000 when it costs them almost that amount to produce it. Our correspondent witnessed vendors who stand outside shops buying bread from bakers like Lobels at Z$40,000 per loaf. They in turn sold each loaf for a minimum Z$50,000.

Asked if people understand why businesses cannot reduce prices by 50% or more, as ordered by government, Muchemwa said many people do understand because they live with the hyperinflation and they sell tomatoes and other items themselves for profit. When that profit margin becomes zero, they raise the price again. But the ordinary person does not have access to government officials to allow them to express their frustrations so the shops and people who work in them are easy targets for their anger at the price increases.

Speaking at the burial of the late Army Brigadier General Armstrong Gunda Wednesday, Robert Mugabe threatened to take over all foreign companies, accusing them of hiking prices in a campaign to remove him from government. Critics say this is a diversion from the real issue, which is that he has no solution to the economic mess he created through the chaotic Land Reform Programme, and years of unchecked corruption and mismanagement.

 

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