Sunday, July 08, 2007
THE Government, through the Ministry of Industry and International Trade, recently launched a crackdown on profiteering businesses, ordered price cuts and set up a crack unit to enforce the directive. Businesses across the board have complied with the directive and cut prices to the levels that obtained on June 18.
Consumers, who were reeling under extortionate price hikes, have hailed the move while sceptics claim it is nothing but a populist, short-term measure by the Government. The Herald caught up with the man at the centre of the action, the Minister of Industry and International Trade, CDE OBERT MPOFU, who also chairs the Ministerial Taskforce on Pricing Monitoring and Stabilisation, to talk about this and other issues.
Q: Minister, this week you ordered price cuts for basic commodities. Is there any special reason for the timing? Why didn’t you do so all along?
A: Are you suggesting, with that question, that the rate at which prices were going up was normal? The rate was obviously abnormal; it was not based on economic fundamentals, and that is the reason why we acted now.
Q: The response by business has been to remove the goods you listed from shop shelves. What interventions do you have to ensure that consumers are not held to ransom through artificial shortages?
A: As you rightly said, these are artificial shortages. They are to be expected whenever you embark on major policy shifts. These shortages are, however, temporary. We are dealing with those behind the shortages, and assisting those who are willing to work with the Government.
Q: Minister, the price freeze appears to be targeted at shop owners. Aren’t you here addressing only the symptoms and not the disease?
A: We have said since the start of the taskforce that the whole idea is to look up the entire supply chain, from the producer to the consumer. We want to find the challenges facing the producer, the challenges facing the wholesaler, the challenges facing the retailer right up to the consumer. It is the whole production chain we are looking at. We are addressing the issues holistically. We have since split our team into sub-sectors. For instance, we have a team dealing with the pharmaceutical industry, a team dealing with the food industry and so forth. It is a national exercise, quite mammoth and we have the manpower for it.
Q: The price freeze is obviously a temporary measure . . .
A: No, it’s not a price freeze, I wouldn’t refer to it as a price freeze. We are stabilising the prices to protect the generality of our people against profiteers.
Q: OK, but what do you hope to do in the long-term to ensure that businesses use pricing models? It appears all they are doing right now is indexing prices to the illegal parallel market rate for the US dollar?
A: This is a temporary measure aimed at coming up with long-term measures to determine our prices. There is no doubt that at the end, all prices have to be justified and based on formulae. That is the whole point, there will be no room for speculative pricing.
Q: Granted, you chair a Ministerial Taskforce to monitor prices, that again appears to be a temporary measure. What is holding back the National Incomes and Pricing Commission? When can we expect the Prices and Incomes Commission to start functioning?
A: Nothing is holding back the National Incomes and Pricing Commission. It has been enacted at law. We got a board in place, a commission in place. It has been allocated a budget, a substantial budget. We are going to be using it.
Q: Minister, the Commissioners are part-timers, do you feel they will be able to keep pressure on the entire supply chain?
A: Yes, they are part-timers but they have a permanent secretariat comprising of economists, lawyers, in fact all the relevant personnel needed to carry out such a mammoth exercise. So that aspect will not affect the operations of the Commission.
Q: Minister, what does this say about the recently signed Social Contract? Do you see it serving its intended purpose when partners have to police each other?
A: The TNF (Tripartite Negotiating Forum) signed a contract on June 1, which actually stated certain agreements, among them the need for pricing based on economic fundamentals, that had to be adhered to. Unfortunately, as you are aware, soon after signing the protocols, prices began going up in an unprecedented manner. This is why we want to ensure that all parties adhere to the agreements, even if it means policing each other.
Q: It is clear, Minister that you are not merely dealing with a political problem here, for instance outgoing US ambassador, one Christopher Dell, recently projected that inflation would reach 1,5 million percent by December, what political interventions do you have in mind to complement the economic measures?
A: All the economic measures are determined by the political measures we are employing. There is no question about it, we are a political party in power, and our politics inform Government policy. So the politics cannot be divorced from this as well.
Q: A recent survey by the Confederation of Zimbabwe Industries found that the manufacturing sector declined by 7 percent last year eroding the 3,2 percent growth it registered in 2005. Economists agree that production is the only way to bring down the prevailing hyperinflation. What plans do you have to ensure that the manufacturing and other sectors come out of the doldrums?
A: That’s true, but as you know agriculture is the mainstay of our economy, and as you know our agricultural productivity has been going down because of the successive seasons of drought that we experienced. Even with that Government has always provided for the support of all productive sectors, and we will certainly continue doing so. Key to our mandate is addressing the issue of supply. We have identified and managed to provide the necessary measures until the situation stabilises. If you were following the trend, you will have noticed that the illegal parallel market exchange rates have drastically reduced, even activities at the Stock Exchange have responded. This is going to go down as one of the fastest ways of reducing inflation.
Q: Your words to Zimbabweans?
A: Everything being done is aimed at addressing national concerns, their concerns, the measures the Government has taken are measures that were agreed to at our conference in Goromonzi. They were endorsed by the Politburo and adopted by the Central Committee. Detractors will find that what they were trying to do has come unstuck, even Dell will discover that his projections were wayward.