Gono scores against evil
RESERVE Bank governor Gideon Gono this week scored a point against evil. Whether that ultimately translates into a policy victory against unnecessary encroachment by the establishment in what amounts to the
day-to-day running of business remains to be seen.
After weeks of anxiety and uncertainty across all sectors of the economy, Gono on Tuesday announced that there would be no second price blitz to force importers of basic commodities to charge unrealistic prices. He said a wrong impression had also been created that government wanted to ban the importation of basic goods.
In the light of the scarcity of goods on the formal market, Gono said “we welcome imported goods and products in our market as we wait for local products to fill those shelves. If we take out the products without replacing them, all that we would have created are empty shelves,” Gono told a press conference in Harare.
The good thing is that the author of all the uncertainty and anxiety among producers and consumers alike, National Incomes and Pricing Commission chair Godwills Masimirembwa, was sitting next to the governor. It was Masimirembwa, in a moment of “irrational exuberance”, who gave companies stocking foreign goods an ultimatum to clear them by November 22 or face a mass invasion as happened in July.
Over the past few weeks since his appointment to that ivory tower post, Masimirembwa has not pulled punches, showing how power can suddenly breed dangerous arrogance in a man.
He has rejected pleas by business that often they fund some of their key components through imports obtained at onerous black market rates and therefore cannot adhere to prices that his commission plucks from the air. In fact, he is demanding that businesses justify their prices, but will not listen when they explain what they are doing.
Masimirembwa told The Voice newspaper last week that another price murambatsvina was on the way. “Definitely there is going to be another price blitz as we have discovered that shops are now filled with imported goods which are substituting essential local products,” he said. “The local products are supposed to be cheap, but they are not in the shops and are only found on the parallel market.”
This week he was forced to recant, pretending he always knew that imported goods acted as a “buffer to complement internal production levels”.
He said mistrust and suspicion had been created among stakeholders about what needs to be done: “Consistent with this, I wish to clarify that it is not factual that NIPC had or ever contemplated banning the sale of imported goods in our shops,” said Masimirembwa on Tuesday. “To the contrary, the imported goods are essential to complement internal production levels.”
But even that misses the essential point, which is that the country is relying on imports because local manufacturers are not allowed to charge economic prices for their goods. Manufacturers can also not produce freely when there is constant fear of company takeovers by a predatory state.
On the other hand, shop owners face a serious dilemma — they cannot stock sufficient goods when there is fear that they may be raided without warning and have all their goods looted to punish “profiteering” or “errant businesspeople”, as Masimirembwa calls them. When they take the risk and stock the goods, they are not allowed to recover costs. In short, we have come to a point where businesses are treated like charity organisations which survive on donor support.
Masimirembwa and his principals might be right that many basic commodities which are missing from the formal market are found in abundance on the black market. This is because the same people they are trying to protect, the poor, loot the cheap goods from the shops to sell them to fellow sufferers at satanic profits. Unfortunately, they don’t produce.
Then of course there is the fundamental issue that price controls per se cannot provide a sustainable solution to the crisis of inflation and high consumer prices. Instead of the pricing commission harassing producers and retailers, they should be monitoring people given free seed, fuel, ploughs and tractors that they are putting these to productive use. This is the root of all our problems: until we increase productivity on the farms we shall continue to run in circles and targeting the wrong people for blame. Gono should make this elementary truth clear to his principals, and Masimirembwa should revert to his role as a fulltime Herald columnist and stay out of economic matters.