Maravi

(HERALD) Retailers ripping off consumers

Retailers ripping off consumers
By Milford Chitubu in Cape Town, South Africa

A LOT has been written about the displeasure most Zimbabweans are quietly enduring at the hands of the country’s business community. What irks me the most is that the leadership in our corporate sector are lately the most vocal and seemingly the "know-it-all", yet they are themselves presiding over a sector that is seriously shortchanging the general public.

My outrage is not one without illustration.

Firstly, I was horrified to discover that some companies here in Zimbabwe are siphoning out of the country tonnes and tonnes of the basic commodities they are producing, while starving the domestic market.

What is worse, it is very likely that such "exports" are never accounted for in these companies’ formal books of accounts.

One only needs to cross into Botswana to see loads of beverages with a "made in Zimbabwe" logo.

One only needs to go to Namibia looking for sugar, only to be told that what some companies there are selling back to Zimbabwe is in fact sugar originally smuggled from Zimbabwe.

Being in the Information Technology and Communications business, I travel quite frequently in the region and again I was recently in Malawi, Zambia and Mozambique where I saw milk products typically coming out of Zimbabwe, yet the same are strangely scarce back home.

One can go on and on to include minerals such as gold, diamonds, platinum, chrome, emeralds and coal fines, among many others, that are leaving the country unaccounted for, in the process prejudicing the country of millions in foreign currency, as well as causing inflationary shortages on the domestic market.

Yes, to the one-sided thinkers and analysts, the preferred assessment is to blame Zimra, the Police or the Exchange Control arms of the Central Bank for having porous ports of exit or systems with loopholes.

Yet, it is an indisputable imperative that the business community itself has to also play an important and leading role in curbing the damaging leakages that are taking place in the economy.

To prove my point, another reference point is to look at Zimbabwe’s exports into our major trading partner, South Africa, as recorded by South Africa itself and compare with what our companies declare to the officials.

Given the passion burning inside me, and the need for our business sector to stop the one-way street blame game, I took time to analyse these statistics.

During the first quarter of 2008, published South African trade statistics (South African Revenue Services) indicate that merchandise exports into that country from Zimbabwe totalled at least 1,6 billion rand.

The story turns disappointing when one looks at the official records in the direction of trade diary showing declared exports to South Africa of only around US$110 million over the same period.

This is most likely a mere tip of the iceberg, and so what is our business sector doing about it?

Are they not playing a cat and mouse game, killing the economy?

The height of deceit and ravaging greediness by some of our captains of industry and their shareholders does also reflect in the ridiculous prices that are now characterising our economy.

Take for instance the discrepancy between the prices of basic commodities here in Zimbabwe against those obtaining just across our borders.

A small bottle of cooking oil (750ml) for instance, costs under 14 rand, but alas here in Zimbabwe it now costs around Z$15 billion.

Other examples to show how our business sector is letting the public down are the following disparate price comparatives: Flour, 10kg (ZAR70,5 against Z$60 billion); Green bar 1kg of soap, (ZAR 7 against Z$6 billion); 2kg of rice (ZAR 14,25 against Z$15 billion) and 500g washing powder (ZAR 10 against Z$12 billion), among many other outrageous overpricing patterns here in Zimbabwe.

Yes, I know some, particularly the skin-deep economists turned "experts" would be quick to say it is Zimbabwe’s high cost of production (inflation) explaining these ridiculous prices.

But the reality is very clear: Zimbabwe’s pricing systems have fallen victim to what strongly appears to be complicity by business to breed and sustain a veld-fire of unabated price increases that go beyond what production costs justify.

I did some quick computations of the indicative purchasing power parity exchange rate that takes into account the differential between domestic inflation and that in trading partners) and found the shocking reality that the exchange rate ought to be now only around Z$500 million to 1US$.

I challenge any economist to prove me wrong through factual computations!

What this means is that, for instance, the 750ml cooking oil bottle of around R14 should be trading around Z$700 million here in Zimbabwe, and not the ridiculous Z$15 billion plus prices that we are seeing.

Others at the helm of industry have recently been chanting "soon the Zimbabwean dollar would be worth nothing" and for sure we see them increasing prices hourly, even in foreign currency terms!

This is true, one only needs to get quotations even in US dollars from one company and move on to get the same from others or at the same company the next day.

The US dollar price variations and daily increases are staggering.

As patriotic Zimbabweans, we must choose the path of doing things for the common good, as opposed to selfish pursuit of profits or convoluted political agendas.

Our business sector should go back to the canons of entrepreneurship and realise that the heart and spirit of commercial enterprise ought to reside on prosperity that comes through rewards on actual production/service delivery, as opposed to overnight blossoming of profits through victimisation of consumers.

Lest I am accused of being also one sided, I want to end by saying that Zimbabwe’s inflation will be stabilised as a result of combined efforts across the board.

Fiscal and monetary authorities will need to play their part through balanced austerity, while our private sector also rolls up its sleeves to produce and sell their goods and services at fair prices that reflect the true costs of production plus normal profit margins.

Fellow Zimbabweans, it is not good for our nation, if our businesses make hefty profit margins while the vulnerable groups suffer.

Please, let me end by calling upon the authorities to invoke strategies that will shape the mind-frame of our private sector through the powers of supply and demand.

More precisely, the authorities should seriously consider flooding the market with cheaper, high-quality basic commodities from across our borders, so as to introduce the discipline that inevitably comes with competition.

It is in this context that we applaud the move by the Government to remove import duty on basic commodities.

This move should now be followed by radical injection of competition to wake up our industry into getting more responsible.

Shrill calls and outcries that importation of cheap basic goods will cause unemployment here at home must be resisted and ignored until our business sector shapes up.

The same need for reform also applies to our banking sector.

There are some banks which seem to be relishing themselves by perpetually driving up the exchange rate, effectively showing a degree of irresponsibility and abuse of the new flexible exchange rate policy of Government.

Unless and until we all work collectively and responsibly as patriotic Zimbabweans, our economic conditions will take long to put right.

We are a very rich country which cannot afford to be poor.

Labels: BUSINESS, ZIMBABWE

posted by MrK @ 11:56 PM