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Eric Bloch Column

Govt’s economic paranoia growing

IN its deep-seated convictions of near megalomaniac proportions that it is omnipotent and infallible, government has long attributed the diverse ills that plague Zimbabwe to the vile machinations of others.

P>Its intense paranoia that others are firmly set upon its destruction, convinces government that there are those obsessed with bringing it down by resorting to diabolically evil actions which, in order to destroy it, inflict ever greater hardships and distress upon the Zimbabwean populace. Thus, ever since the economy was set upon a path of never-ending decline, in late 1997, government has sought to identify those responsible for that decline wilfully oblivious to the incontrovertible fact that it is itself the cause of destruction of the economy.

First and foremost, it has cast blame upon the United Kingdom in general, and its Prime Minister Tony Blair in particular. As alleged co-conspirators and accessories to Britain’s supposed actions, government has repeatedly, and unhesitatingly, pointed its accusatory finger at the USA (and especially at its president, George Bush), at the European Union, at white Zimbabweans (with white commercial farmers ostensibly being at the forefront of the alleged anti-Zimbabwe government campaign), at the opposition, and at the independent press and allied media.

As the economy progressively weakened, many scarcities developed. Those scarcities ranged from petroleum products to electricity, basic commodities such as bread, sugar, flour, cooking oil, soap, coal and much else. Foremost of the causes of the shortages has been a gross, growing non-availability of foreign currency, required for the importation of manufacturing inputs, spares for plant and machinery, and other essential elements of most manufacturing processes.

Inevitably, as has been the case the world over, in instances of inadequacies of supply to meet market demand, a virile black market soon developed. That market is thriving and is probably the only sector of the Zimbabwean economy enjoying real growth.

Whensoever demand for a product outstrips supply, the price of the product rises and continues to do so as customers compete for the product, until such time as the price reaches a resistance level where the consumer will no longer be willing to purchase, usually because no matter how greatly he needs the product, he cannot afford it.

This is a very strong characteristic of black markets, wheresoever they may be. The Zimbabwean economy is no exception. As the prices rise, consumers become increasingly embittered, with that bitterness reaching a pinnacle when the consumer must either forgo other products in order to fund that which he needs most, or he must go without a product, notwithstanding need.

That bitterness, and the concomitant hardships, provokes the populace to seek to blame someone for the misery and the distress suffered, and in Zimbabwe the Consumer Council of Zimbabwe (CCZ) is usually alongside government at the forefront of identifying recipients of blame.

After all, it is the task of CCZ to protect the consumer, and therefore it strives vigorously to destroy the black market and to place blame for its existence upon those that it perceives to be responsible for its existence, instead of upon the real culprit — being government.

Naturally, government is extremely sensitive to the situation, for it does not wish to be the recipient of blame and particularly as its conviction of its omnipotence and its infallibility motivates it to believe that the circumstances cannot possibly be due to it. Therefore, it casts around to find someone to blame and, upon doing so, very rapidly convinces itself that the focus of its ire is in fact the cause.

For a considerable period of time it has unhesitatingly accused the manufacturing sector, aided and abetted by the wholesalers and retailers, of being the culprits who, driven by extreme greed, seek to profiteer at the expense of the poor consumer.

It is, insofar as government is concerned, irrelevant as to whether or not the manufacturers, wholesalers and retailers are actually at fault. It suffices that they are credible targets upon whose shoulders blame can be placed, and that credibility, and the need to place fault upon someone other than government, enables government to convince itself that they are actually the culprits. This was, and is, the stance of the president, the cabinet, the former Minister of Industry and International Trade, Dr Samuel Mumbengegwi and, as recently as last week, of the secretary for Industry and International Trade, Rtd Col Christian Katsande, strongly supported by the state-controlled media.

He is reported to have said that government would probe manufacturers to find out factors behind the product shortages, and that “our ministry is concerned about the continuous shortages of commodities at a time when we have reached an agreement with manufacturers about price adjustments. Anyway, some measures are being discussed to ensure that operations of manufacturing firms are strictly monitored” so as to ensure that manufacturers continued to supply enough goods to retailers.

He stated that government is committed to ensure the availability of goods in the formal markets, for “black market trading is not tolerated in Zimbabwe as it leads to an increase in prices. So our main agenda is to ensure that manufacturers comply with production targets.”

Concurrently, the CCZ has forthrightly and scathingly criticised manufacturers for creating “artificial shortages” of most basic commodities in order to “push prices up”. The Bulawayo regional manager of the CCZ, Comfort Muchekeza, is reported to have said that most retailers are selling products at much higher than set prices, or are rationing such products in order to give the impression that those products are not available.

The contentions of Katsande and Muchekeza were strongly supported in an editorial in Zimbabwe’s largest circulation daily newspaper, owned indirectly by government. It sought to prove that manufacturers operate in bad faith and to the prejudice of consumers by rebutting claims of manufacturers that product shortages were due to non-availability of foreign currency to import raw materials, machinery and spare parts, over and above other constraints.

The editorial posed the question: “If this were so, how do the manufacturers explain that those seemingly scarce commodities are available within the black market?” It demands that manufacturers, “as partners in development, need to behave responsibly and desist from feeding the black market”.

It appears to be beyond the capacity of government, or its press, to consider that there can be any other causes of the shortages, and yet that is the reality. It is very evident from the magnitude of unsuccessful bids at each and every foreign currency auction that there is a massive insufficiency of foreign exchange.

The inability to access the extent of foreign currency needed has severely impaired industrial productivity. Government and the misguided editors and reporters could rapidly establish the realities of manufacturing productivity by non-confrontational interaction with the Confederation of Zimbabwe Industries and its members. If they did so, they would soon discover that many factories are constrained to production of 30% or less, of productive capacity. Others have been reduced to working two or three-day weeks.

As to availability of the scarce products in the black market, there is a very simple and extremely credible, easily verifiable explanation. Black marketeers realise that their opportunities are most pronounced when shortages exist, and are therefore very alert to the development of any scarcities. They carefully monitor when any supplies whatsoever of those insufficiently available, necessary products are delivered to retailers, and immediately purchase the suddenly available goods, thereby restoring an environment of shortages, whilst simultaneously acquiring the trading stocks for their operations thereafter.

That this is so is not mere speculation, for many have observed (including this columnist) that within minutes of products such as sugar, flour and cooking oil, reaching the supermarkets large queues develop, with each person purchasing the maximum permitted quantities, and very shortly thereafter, those purchased products are available for sale by the black marketeers in close-by sanitary lanes, the few remaining flea markets, and the like.

Moreover, when the retailers “ration” products, with the intent of supplying as many customers as possible, it is very evident that many of the queuing customers are colleagues and syndicates, collaborating in buying as much as possible, so as to intensify the shortages, and so as to maximise the quantity of the goods they have for sale.

Government’s paranoia is becoming so pronounced that it blinds itself to these facts, but dwells upon ill-conceived perceptions, demoralising already severely distressed manufacturers, and discouraging investors who abhor excessive regulation.

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