Government mulls price reductions

THE Zimbabwean government is considering reducing prices for goods and services in line with prevailing regional and international rates amid concerns service providers are ripping off customers, a top government official has said.

Taurai Mangudhla

Cabinet is currently discussing the issue of pricing with a view to correcting the anomaly, Tourism minister Walter Mzembi on Wednesday told a press briefing.

Fuel dealers have colluded to continue selling fuel at high prices despite a global markdown on the product, Mzembi said.

Fuel prices are expected to fall even further as international reports on Wednesday said the price of brent crude oil had fallen below US$50 a barrel for the first time since May 2009.

“If I were the Minister of Energy, I would investigate this anomaly, it has ramifications on the competitiveness of the economy,” Mzembi said.

“If the region is benefiting from a global markdown on fuel, why should we be the only country that does not experience that?”
Mzembi said the pricing problems cut across all sectors and have a negative bearing on the economy.

“This is not just in my sector and when you talk of destination competitiveness it means everything,” he said.

“It is a problem when your hamburger costs US$15 dollars which is more than what your counterparts charge in Zambia. We are doing bungee jumping for US$150 and Zambia is charging two thirds of that on the same bridge.”

Apart from fuel, rentals remain high for Zimbabwe’s prime space at a time the economy is suffering from a number of challenges that have seen companies shutting down or retrenching.

Mobile phone and internet tariffs as well as medical fees have also been described by researchers as above regional averages.

Mzembi said it will remain difficult for the Zimbabwe Tourism Authority to market Zimbabwe as a preferable destination if the pricing anomalies are not addressed.

“If we don’t fix the issue of pricing, we can sell the destination’s weather which has no price, but the actual product will be out of sync with international standards,” said the minister.

He said international carrier, KLM Royal Dutch Airlines, discontinued flights to Harare in October after 18 months of operation for, among other reasons, the high cost of fuel.

He said despite having trouble to get the right load factors, KLM Roman Dutch Airlines officials revealed the high cost of fuel in Zimbabwe as one of their challenges.

Mzembi’s statement comes ahead of the 2015 edition of Netherlands’s holiday fare Benelux Market.

Zimbabwe’s delegation, to be led by the Ministry of Tourism, has been sponsored by the Royal Netherlands Embassy in Harare.

Dutch Ambassador to Zimbabwe, Zambia and Malawi Gera Sneller said the Dutch embassy has provided more than US$100 000 to fund the fare and other activities.

Sneller said the funding is part of her country’s efforts to put Zimbabwe on the map, first in the Netherlands and then Europe.
She said her government has funding to support activities that have a continuum between aid and trade.

“As the Netherlands, we have said one of the most important things is to support the private sector,” Sneller said.

ZTA CEO Karikoga Kaseke welcomed the financial support, saying it coincides with government’s thrust to re-engage the West.

He said total tourist arrivals from Belgium, Netherlands and Luxemburg stood at 14 000 in 2013, down from peak levels of 39 800 in 1999.

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10 Responses to Government mulls price reductions

  1. stanley mudzi January 9, 2015 at 10:12 am #

    Fuel yacho inodzikiswa nani ivo vari busy kuita zvisina maturo. Zvinopa raramo kumhomho tsvee. NXAAAAAA. Mwari vachapindira chete.

  2. Jonso Moyio January 9, 2015 at 11:53 am #

    Greed and coruption. That is two words that gives reason why the fuel price in Zim has not gone down, look at what Mzembi says about bunjie jumping and hamburgers. There are too many persons to pay. What can you say about a country that promulgates laws to benefit one businessman. Corruption has now become an industry I think it should be subject tovtaxation too.

  3. Maidei January 9, 2015 at 12:22 pm #

    Issue is, in countries like SA, it is the government that follows the international fuel price trends for example and sets the local prices accordingly. Our government is preoccupied with the wrong things and they do not even seem to have realised that the international brent crude price has fallen drastically. In other words, we have no government.

  4. Majuru January 9, 2015 at 1:39 pm #

    The Minister of Finance and that of Industry and Commerce need to wake up. Let me ask this question….Say the dairy industry is operating at 15 % capacity utilisation due to a reduced national dairy herd…..Doesnt it make sense to allow the dairy industry to import cheap milk, repackage it and make profits but government saying use the proceeds to import dairy calves for dairy farmers?Wont that grow the economy?

  5. Majuru January 9, 2015 at 1:46 pm #

    I hear a lot of hooloobalooloo about Joice Mujuru having imported poultry products at a time we needed to grow our local industry. How can our economy grow if each household needs $150.00 of poultry products a month instead of $60.00? Chinamasa cries of a liquidity crunch when we cannot save? Allow the importation of poultry products to force local producers from milking people and destroying our ability to grow our own industry. Allow families to save and people to keep money in their accounts if the economy is to grow. The Heral agrees with my observation: http://www.herald.co.zw/poultry-to-ban-or-not-to-ban/

  6. James Dhludhlu January 9, 2015 at 1:50 pm #

    Its unfortunate that our mindset as a country and economy is still stuck in the hyperinflation era where outrageously astronomical mark ups were the norm. This was the case when our currency was still the Zim Dollar and the reason for the huge mark ups was such that we could try and keep up with the inflation that prevailed at the time.

    When the multi-currency regime was introduced in 2009 the populace was not conditioned for the hard and relatively hard currencies that were introduced, we still “lived” in the era of the Zim Dollar and thus treated these new currencies with the disrespect that we regarded the Zim Dollar with. It is sad that this lack of understanding of the harder currencies is hugely contributing to deterioration of the economy.

    In the resident countries of these currencies mark ups of more than 15% are unheard of unlike in Zim where mark ups of 100% and above on these hard currencies are the order of the day. This, and many other things make our country a very expensive place for both its citizens and its visitors. Businesses should be concerned with volumes rather than mark ups, this is what all the businesses in the economies that matter are concerned about in their strategies.

    Thus our mindsets need to change as a people and and economy if our economy is to change for the better. Unfortunately price controls, as advocated for in the article above are never the ideal solution.

  7. Majuru January 9, 2015 at 1:51 pm #

    If Zimbabwe imports raw materials for fertilisers from Bulgaria, the ZFC and Windmill can sell a 50 kg bag for $18 and make more profit than allowing Sable Chemicals to consume the biggest share of our electricity to produce fertiliser that will cost $35 and ZFC and Windmill making loses. Why not shut down unstrategic companies with obsolete equipment and allow the country to import cheaper raw materials that will make our whole value chain produce cheaper goods thereby allowing companies to reopen after borrowing less capital?

  8. Majuru January 9, 2015 at 2:23 pm #

    The Presidential Well-wishers Agricultural Input Scheme – This is a brilliant Scheme if well run. In the 1980s, Zimbabwe’s agriculture was an envy of many because of well intended subsidies. Why doesnt this scheme become a subside to fertiliser and seed companies and reduce the price of inputs for the benefit of all farmers? The money can go into the production of cheaper maize seed to start with. Seed companies buy seed maize from $500/tonne but make roughly $2500/tonne gross. Why cant we use government subsidies strategically to boost agriculture?

  9. E Makhate January 11, 2015 at 11:16 am #

    Today the price of petrol in South Africa has dropped to less than $1 per litre. In poor Zimbabwe its pegged at $1.50 per litre. God deliver us from evil.

    • citizen January 18, 2015 at 9:07 am #

      The Kenya price of petrol is 25% lower than in Zimbabwe and it does not blend ethanol.

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