Proponents of a market economy always insist the state should stay out of business and let the market find its own pricing levels.
Candid Comment with Itai Masuku
However, elementary economics says there are two extremes of the market economy, one where there is perfect competition and another where there is imperfect competition.
It is generally held that where there is perfect competition, the market rules and will match demand and supply to come up with optimal prices.
All things being equal, this should result in lower prices for the consumer for perfect competition encourages efficiencies, and any efficiency should by implication result in the reduction of raw materials required, labour, where this applies, the time used in producing that good or service, or any other input.
If this is on-passed to the market, this should result in reduced prices. A friend who recently attended university in one of the EU countries revealed he spent at most 120 euros on monthly requirements. However, the same products would cost him at least twice the amount, if not more in this country.
He laments that we don’t have an open market economy and as a lawyer, points this is made worse by the fact that we have weak competition laws. This is not to slight our Tariffs and Competition Commission, but how many times do you actually see them preventing the monopolistic and oligopolistic practices by many of our major businesses?
This is particularly so because many of the anti-competition enterprises are supported by or include influential politicians.
While in the developed economies money rules, here politics rules and businesses are wary of being caught on the wrong side of the political divide, even if they are right.
As a result many businesses here are cartels that are very difficult to penetrate. Ever wondered why South Africa’s MTN has failed to enter the local market? We have legislated cartelisation of the mobile telephony sector. Who says an economy can only absorb so many telephony companies? Only the market should say that.
The reason why our roads are in such a state of disrepair is because there are too many heavy trucks (goneyets) on roads that can’t sustain their loads. Why is that so?
I only learnt this week this was a result of yet some cartelisation of the transport sector where operators and freight agents ensure that anyone importing would only be quoted on road costs, not rail, which can be up to 26 times cheaper? The reason is simple, the more it costs the better for the agent, whose commission is based on the total cost of freight. That NRZ in its ineptitude abated this cartelisation did not help either.
The same goes for the Beira Corridor route, which functioned well during the days of sanctions against South Africa, yet, instead of increasing safety and volumes after apartheid we started using Durban more.
The story is the same for Beira which is a nightmare. But why do the South Africans use Beira and Maputo for least-cost-to-shore?
The tales are endless, but there is need for serious examination of the cartelisation of Zimbabwe’s industries, which among other things are distorting import bills and the prices of goods.