THE National Incomes and Pricing Commission (NIPC) has been accused of being a toothless bulldog or an extension of Zanu PF which only makes statements without producing results. businessdigest reporter Jesilyn Dendere this week spoke to NIPC chairperson Goodwills Masimirembwa (GM) on the latest developments. The NIPC recently ordered business to revert to prices prior to December 3.
JD: Tell us more on what for the NIPC has been your highlight this year? It seems like you have suddenly gone quiet.
GM: We have been working very hard and that is why prior to December 3 prices prevailing on the market were fairly reasonable but what happened on December 4 was complete madness. When the business community got to know that individuals and corporates were now going to withdraw $100 million and $50 million respectively, they unilaterally increased prices without consultations with the NIPC. It is shocking when one looks at the excessive prices but we have been around, still monitoring prices and doing our duties.
JD: Earlier this month, NIPC instructed business to go back to November 26 prices but we never saw that happening. What makes you think business will listen to you this time around?
GM: They did, they complied but we are not saying when one reverts back, they remain static forever, they can then apply for new prices. At the moment we are saying go back to December 3 then make applications to justify any price increases.
JD: Has there been any communication with the central bank to solve the problem because every time withdrawal limits are increased, businesses respond by adjusting their prices
GM: They respond negatively by increasing prices but we are saying enough is enough. Our hope was that business would behave responsibly and charge fairly even after a (cash withdrawal) review.
Those 25 fold price increases are beyond being reasonable, a point that has been concurred by some business leaders. The recent directive is for the entire economic spectrum including newspapers and mobile phone service providers because we woke up one morning to find out that the money in our cell-phones could not even send a text message.
JD: What action is the NIPC taking besides simply advising businesspeople to reduce prices?
GM: We are not only advising, our teams are on the ground as I speak, monitoring the situation and causing the arrest of those who are caught breaking the law.
We have now received assistance from the government in terms of resources, and our inspectors will be covering all provinces effectively come this Thursday (yesterday). Remember withdrawal limits are going up on Friday (today) and already we are seeing the desire to effect new prices. We are seeing ridiculous applications, for example an application to sell a 2 litre bottle of cooking oil for $200 million, they want to make sure the $500 million becomes meaningless.
JD: Does it only apply to retailers?
GM: The whole supply chain will be affected from the manufacturer or the importer if there are imported goods.
JD: Is the NIPC also involved in monitoring Foliwars?
GM: Our approach to Foliwars has been that it is a new phenomenon. We are saying to them, clear the goods with the central bank so that you apply the appropriate margins which in this case is 30%. We have been monitoring and ensuring that it is not about profiteering. We do not want a situation of markups which are over 100%. All we are saying is that if you are having operational difficulties go to the central bank and clear those difficulties whatever they may be before we come in. We will then liaise with the Reserve Bank, we cannot just move into Foliwars without liaising with the central bank.
JD: Have you received complaints with regards to Foliwars?
GM: We have heard complaints from members of the public that their prices are very high as compared to those in the region and that some locally produced products are very expensive here than across the borders and we are investigating the causes why businesspeople want to profiteer here in Zimbabwe and not across the borders.
JD: The Reserve Bank of Zimbabwe has always clashed with NIPC over the latterâ€™s grip on controlling prices, how has been the relationship between the two with regards to Foliwars.
GM: We have an excellent working relationship; we are exchanging notes with the hope of moving forward and eventually getting Foliwars to apply reasonable margins at the same time making reasonable profits. Besides the Foliwars concept, what we are observing are people still going out to buy outside the country because the goods there are still cheaper.
Our appeal to Foliwars is that why allow the foreign currency to go to other countries. Reduce profit margins, move larger volumes. When our people are happy we also make huge profits from improved sales.
JD: By allowing shops to trade in foreign currency and local manufacturers to put their goods into Foliwars, the government and the central bank wanted manufacturers to earn foreign currency so that they can acquire raw materials: The business community has always quarreled with your organisation; do they ever listen to anything that you say?
GM: Prior to the increase in the withdrawal limit, we were now having an amicable, reasonable relationship coupled with compliance. I do not know what went wrong onÂ December 4, they just woke up on the wrong side of the bed. We met them and the general belief was that the increased withdrawal limit pushed the parallel market rates up and our answer is that the NIPC does not know what happens on the parallel market, we cannot use it as a barometer to peg prices because it is illegal in the first place.
JD: As an Incomes and Pricing Commission, what has the NIPC done to lobby for workers to be paid in foreign currency to so that they can also buy from the Foliwars.
GM: We need to clear the confusion, Zimbabwe does not print foreign currency, our legal tender is the Zimbabwean dollar, that is why we call other currencies foreign. There is not enough foreign currency with which to pay workers. It is impossible. The reason why government and the central bank decided to open Foliwars was to capture the foreign currency so as to increase capacity utilisation, it was not generally about dollarisation of the economy because the government cannot afford to pay everyone in foreign currency.
JD: What has the NIPC done to the ever rising commuter fares?
GM: We have pegged fares for urban transportation, although we have not been able to enforce these largely because of resource constraints but now that we are resourced you will see more of the NIPC coming not only in transport but into commercial rentals as well.Â With greater resource capacity that we now have we will see more of the NIPC on the ground effectively monitoring prices of goods and services at the same time ensuring compliance.