IN yet another act of economic lunacy, the government recently announced that the price of fuel was to be drastically reduced to $335 for petrol and $320 for diesel.
The predictable result: fuel is now much scarcer and much more
expensive than before. Before government’s act of lunacy we were able to buy fuel for about $750 to $850 per litre. Now we are forced to buy it on the black market for $1 600 per litre (and rising). It is mostly the black market dealers, or their surrogates, who can afford to spend most of a working day queuing for 30 litres of fuel. For those of us who are desperately trying to remain productive, the opportunity cost of spending all day in a queue to purchase 30 litres of fuel at the government controlled price is simply too great a price to pay.
I recently witnessed a commonplace incident. An old vehicle with several drums in its boot filled up with petrol at the Caltex station along St Patrick’s Road in Hatfield (one of the coupons only, direct fuel import service stations). It was the drums that were filled up, not the vehicle’s own tank. Once outside the Caltex station it drove no more than a few yards into a side road. The petrol was immediately off loaded for resale on the thriving black market — right outside the Caltex station and not far from the Hatfield police station.
In another ongoing act of economic lunacy the government continues to fix the exchange rate at $250:US$1. I am aware that Gono has long abandoned orthodox economic theory in his supposed attempts to rescue Zimbabwe’s economy, but perhaps in the best interests of long suffering Zimbabweans, it is time for him to get re-acquainted with some of the fundamentals of economic theory and practice.
He might start with the basic laws of supply and demand. From there he could advance to the purchasing power parity theory and contemplate the cost in US dollars of most products available in Zimbabwe by converting the Zimbabwe dollar price at his official rate of 250:US$1. (For example, a litre of petrol on the black market costs more than US$6. A loaf of bread costs more than US$1. Two kgs of margarine costs more than US$16. A Nando’s take away costs US$10 or more.) Factor in what most Zimbabweans earn as compared with their American counterparts and the absurdity of the official exchange rate must be apparent to even the most blinkered of policy makers.
Further proof, if it was needed, of the government’s total ignorance of, or simple disregard for, basic economic principles was once again given with its recent response to an increase in the price of bread. The price of bread was increased. Government arrested bakers and retailers. Bread ceased to be available for sale. A couple of weeks elapsed. Bread re-appeared for sale at the higher price — for which two weeks previously people had been arrested.
A comedy of errors? A farce? A soap opera? It’s hard to categorise the long running saga of Zimbabwe’s economic destruction, except perhaps for the masses of Zimbabwe for whom it is undoubtedly a tragedy.That Gono’s catch phrase “failure is not an option” will go down in history alongside such other gems as Ian Smith’s “Never in a thousand years” is no longer in doubt.
Our problem in Zimbabwe is that failure is rewarded, be it at the Reserve Bank, Town House, or even higher up the housing list.