Import ban triggers wave of sweeping price spikes

“THE employer makes us change these price tags almost every day; it takes someone with a good eye or an interest to notice some of these margins in price increase or decrease,” explains a sales lady at a supermarket in Harare.

By Hazel Ndebele

CCZ executive director Rosemary Siyachitema
CCZ executive director Rosemary Siyachitema

She is removing an old price sticker on the cooking oil shelf and replacing it with a new one. This has now become almost her daily routine.

While Statutory Instrument (SI) 64 of 2016 restricting or banning imports seeks to contain Zimbabwe’s import bill, analysts say the intervention has resulted in rent-seeking behaviour and monopolistic or extortionist tendencies by local manufacturers.

The new price for two litres of cooking oil, for instance, has jumped from US$2,99 to US$3,25 following the promulgation of the Statutory Instrument.

When this reporter enquires as to whether the price increase has just been on cooking oil or on all the products in the supermarket, the reply is startling. The lady reveals even though prices have been fluctuating in the past two months, there has been a marked increase in the prices of a number of basic commodities in the country.

“We usually increase just by a small margin, which is why most people really do not notice. Sometimes some products such as salt can increase by as little as two to three cents,” she says.

A snap survey by the Zimbabwe Independent over the past two months shows that prices, particularly of basic commodities, are rising.

For instance a 2kg packet of sugar in most shops which was previously US$1,65 now costs US$1,99. The price of 10kg mealie-meal over the period of the survey increased from an average US$4,65 to between US$5,50 and US$6,10. For a 20kg packet of mealie-meal the price has increased from US$9,40 to US$11,80 in most supermarkets.

The supermarkets which the Independent visited during the period include Pick n Pay, Ok, Bon Marché, Spar, Food Lover’s Market as well as Food World.

While the cost of living as measured by the Consumer Council of Zimbabwe (CCZ)’s low-income urban earner monthly basket for a family of six was almost stagnant at US$567,91 by end of July from the June figure of US$567,38, prices of basic commodities have in recent times been on an upward trend.

CCZ’s July monthly price review complements this newspaper’s survey which also shows price increases of various products.

In its July report, the CCZ said it had assumed that the slight increase in prices was due to the grocery import ban imposed by the government.

“The competition in the country has been reduced hence retailers tend to increase prices,” reads the report.
However, CCZ executive director Rosemary Siyachitema this week said the consumer body’s current assessment so far is that SI 64 of 2016 restricting grocery imports has not had a major effect on the price increase, adding that it could also be attributed to the changing price of fuel.

“There has only been a marginal increase in cooking oil but it is now going down. We cannot attribute any increase to the SI 64 as price increases could also be caused by the fluctuating price of fuel which is also a cost-pusher.”

Gazetted in June, SI 64 removed goods that are locally available from Open General Import Licence exemption. The goods include bottled water, mayonnaise, salad cream, peanut butter, jams, maheu, canned fruits, vegetables, pizza, yoghurts, flavoured milks, dairy juice blends, ice creams, cultured milk, cheese, coffee creamers, camphor creams, white petroleum jellies, body creams and plastic pipes.

SI 64 measure has been unpopular with the general public as evidenced by the protests against the move.

Consumers who spoke to this paper during the snap survey felt that suppliers of local products would take advantage of the measure to increase prices due to less or no competition from foreign products.

According to the CCZ, increases in prices were also recorded in tea leaves by US$0,04 from US$1,75 to US$1.79; mealie-meal for 20kg by US$0,40 from US$10,40 to US$10,80; 500 grammes salt by US$0,03 from US$0,20 to US$0,23; 500 grammes washing powder by US$0,20 from US$1,25 to US$1,45; and laundry bar soap by US$0,06 from US$0,99 to US$1,05.
However, decreases in prices were recorded in margarine, rice and tomatoes.

The newspaper’s snap survey also revealed that foreign brands in most products such as bathing soap and petroleum jelly were slowly disappearing from the shelves.

Supermarket assistants from different places shared the same sentiments as they revealed that when prices seem to have decreased it is due to various promotions for certain grocery items.

A sales assistant at Food Lover’s Supermarket said prices in the shop change for various reasons.

“When fruits and vegetables are off-season, prices tend to increase. Most of our prices remain the same because the supermarket imports and orders certain products in large quantities,” he said. “Most local products are expensive, hence the change in prices for the consumer.”

The shop assistant could be seen reducing the price of Ceres fruit juice from US$1,89 to US$1,79.

Buy Zimbabwe chairperson Oswell Binha defended SI 64, saying its essence is to create a level playing field and allow domestic companies to regain lost market share to cheap imports from the region and the rest of the world.

“As production increases and as the industry gains market share, economies of scale will come into play and prices will naturally correct,” he said. “Each policy comes with its trade-offs and hence the SI 64 will also have unintended consequences such as price increases due to lack of competition.”

“The most critical thing to note is every policy, no matter how good or bad it is, comes with its own trade-offs. So SI 64 will also have unintended consequences, but, more importantly, the intended consequences are non-negotiable.
It is evidently a correct short-term approach in supporting re-industrialisation,” he said.

Confederation of Zimbabwe Industries vice-president Sifelani Jabangwe said the major driver of the price increases was a cash shortage which has forced manufacturers to engage middlemen when sourcing raw materials for local industry, thereby pushing up prices by as much as 10%.

“We have also noticed that prices for certain products are going up and we will be conducting our survey soon.

Unfortunately, SI 64 occurred during the cash crisis and will be blamed for the price increase but predominantly the lack of currency is affecting manufacturers and would be the main reason for increase in prices,” he said.

“The SI 64 is to help internal competition just like what is happening with competition in bread; we hope that it will be like that with every product.”