Policy inconsistencies costly for Zim
NOTHING more graphically illustrates the gravity of misgovernance in Zimbabwe than two statements from President Mugabe and Agriculture minister Joseph Made this week.
In his State of the Nation address on Tue
sday, President Mugabe expressed his frustration at the steep increases in the prices of basket goods which he said was contributing to hyperinflation.
“Regrettably, this is also immensely contributing to the rapid erosion of people’s standards of living,” said Mugabe.
“Government however continues to implement measures designed to turn around the economy so prices can stabilise in the context of a growing and expanding economy.”
Listening to the presidential speech evoked a sense of déjà vu. We have heard all this before and as usual, very little has been done to improve our lot. Instead, real government measures were contained in Made’s pronouncement on the same day that the Grain Marketing Board (GMB) was raising the selling price of wheat to millers from $900 000 a tonne to over $12 million, more than 11 times that is. We wait with bated breath for the new selling price for maize.
Made knows the net effect of his new policy. There will be a sharp rise in the price of bread and flour. But in typical Orwellian doublespeak, Made was quick to warn bakers to comply with government regulations when determining new bread prices.
He lamely threatened: “In the past we have seen both prices of flour, wholesale and retail bread being escalated in an unrealistic manner under the guise that the GMB has increased its wheat selling price to millers.”
This is shameful duplicity by the minister. Can Made stand up and tell the nation that the steep increase in the price of wheat from $900 000 to $12,3 million is “realistic”?
For a start, the GMB is buying wheat from farmers at about $6 million a tonne and now wants to sell it for $12,3 million a tonne. This is state-instigated profiteering, the sort that government condemns with shameless passion in the ailing private sector.
Manufacturers have operated under very difficult conditions in which government has forced them to charge uneconomic prices, ostensibly to put a lid on inflation. But our government is culpable. It has regularly triggered inflationary tremors in the economy.
The sharp increase in the selling price of wheat is one such example. The price of bread will have to go up unless President Mugabe’s government can pull out another trick from its bag of voodoo economics. We expect increases in the selling price of maize as well. Currently, the GMB is buying maize from farmers at $2 million a tonne and selling to millers at $600 000.
These aberrations can be tolerated if the state can afford to pay a subsidy. Our government cannot pay that subsidy because it is broke. In fact, there should be a proper and predictable policy regarding agricultural subsidies. Subsidies are meant to protect a vulnerable segment of the society. Thus we have all along been told that government was protecting the poor among us by subsidising maize and wheat.
Industrialists who raised prices in response to inflation were branded by government as saboteurs keen to effect regime change. The same government purporting to champion the cause of the poor wakes up one morning to effect shocking price rises on basic foodstuffs. This shows that past price controls were not meant to cushion the poor. This was cheap populism to give consumers temporary relief during election campaigns.
When “subsidies” are withdrawn without planning, it is bad for the economy. The result of such action is inflationary and defeats all efforts to achieve a rate of 80% in the New Year.
Central bank governor Gideon Gono who has been commanding the war on inflation has suffered another major setback from political leaders who should otherwise be helping him in this fight. This is a battle lost as the price of bread should soon jump to well over a $100 000 a loaf from the current $35 000.
There are bound to be more increases especially after Finance minister Herbert Murerwa last week implored state enterprises to charge economic prices for goods and services. Fuel and telephone charges have already gone up while electricity and other services are expected to follow suit.
Transport is already unaffordable to a majority of the Zimbabwean population. There will be very few traditional family reunions this Christmas, what with the crippling fuel shortages taking their toll on private transport. The government-appointed Harare Commission on Tuesday announced a $32 trillion budget which should see rates and charges going up at least three times.
Is this what Mugabe had in mind when he talked of expanding the economy and stabilising prices? People expect government policies to show some uniformity and consistency, not uncoordinated hands-behind-the-back tricks.