By Tatira Zwinoira
A recent report by the United States Agency for International Development food security arm, the Famine Early Warning Systems Network (Fewsnet), revealed that food stocks in households countrywide are beginning to run low. This comes at a time when the prices of basic goods have skyrocketed beyond the reach of the majority of the country’s citizens. Our senior business reporter, Tatira Zwinoira (TZ), caught up with acting executive director of the Consumer Council of Zimbabwe (CCZ) Rosemary Mpofu (RM) to find out what this means and discuss more about challenges facing consumers.
TZ: In their (Fewsnet) latest report, they say they are noticing that food stocks within households, both in urban and in rural areas across the country, are declining especially in areas which did not receive lots of rainfall and also on the back of the cost of living rising. Have you as the Consumer Council received similar reports?
RM: Yes and no. Yes, in the sense that due to the price hikes that we have experienced, over the last few months, it is increasingly becoming very difficult for consumers to secure food within their households.
But, at the same time, why am I saying no is because the last rainy season was very good and many people managed to grow their own grain, particularly, maize. And, you find that even now, the price of maize is generally fair because at other times by this time, in other years, we would have already experienced a price hike in the maze. Like a bucket of maize at the moment, you can still get it for US$4, US$5. Last year, this time, it was way higher than that. So, this is why I said yes and no.
But generally, as the Consumer Council, we are concerned about the increases in prices because there is no justification whatsoever.
We are aware that manufacturers, millers and many other key stakeholders in the food value chain are accessing foreign currency at the auction rate at RBZ (Reserve Bank of Zimbabwe) and there is no justification why we should continue to see price hikes, particularly, for food.
At the moment, we keep seeing an increase every month. We want to understand why. It is like our retailers, our manufacturers, our wholesalers are so used to just increasing prices, even when there is no reason. They think it is one of their functions. They think that if they do not increase prices in any given month, they will have done wrong by their business. They think it is one of the requirements to increase prices, even when there is no justification. So, we are complaining as consumers to say we want that justification and we are tracking them.
We are looking at all of them, people that are getting forex and they are within the same value chain so there is no justification whatsoever for them to be increasing prices at this point in time because there is a lot of foreign currency in this country. We are told many times that forex is available and even now, people are able to access forex. The ordinary person, you and I, are able to access foreign currency through the bureaux de change so why should we continue to see price increases?
TZ: So, would you say that food stocks running low within the urban and rural households are mainly due to consumers not being able to afford the rising cost of living? Would that be an accurate assessment?
RM: Precisely, it is an affordability issue. Consumers cannot afford to buy the same groceries that they could buy two years ago. Even last year, this time, with the same amount of money you cannot buy the same groceries. Even in US terms, if you were to go into a supermarket using your US dollars, with the same amount that you used to purchase grocery items of say US$100 you will be getting much less so what is the justification for that?
When we track prices, we also compare with other countries in the region. You will realise that our prices are way much higher and this is going to push consumers to start buying from across the borders which as Zimbabweans we do not want to do. We do not want to start doing that again because we will simply increase the value of imports, and do injustice to our forex reserves in this country, but people are already doing that. Households are now using runners to buy sugar from South Africa, to buy corn flakes from South Africa for example. So that is not acceptable.
We should be buying our own products here in Zimbabwe, but if the products become uncompetitive in terms of price we simply cannot afford. This is going to force every Jack and Jill to start importing basic commodities once again from South Africa, you know, externalising much needed forex.
TZ: Where do you think that the officials are getting it wrong? Because according to them, and I am sure you have heard this which is the conundrum in this country, you know, on paper inflation is going down. They are saying the rate of price increases is going down, according to them. But then, on the ground you find, even in USD, even companies have been complaining about what they say is “USD inflation” where prices in US dollars are going up.
RM: No, no, they are not getting it wrong Tatira.
When they say the rate at which prices are going up has decreased, it means prices are still going up even if they are still going up at a much slower pace. So, inflation is going down in that sense. But, what I’m saying is, we do not even want inflation to go up even if it is at a slower pace.
We do not need inflation; we do not need it. If anything, it has to go down because we are back in a multi-currency regime where people can get forex, where manufacturers have enough forex to manufacture and retailers also have forex. There is no need for inflation, be it as slow as zero point something, we do not need that. It has to go down, there is no justification.
Yes, it is going up at a slower rate but we do not even want that slower rate.
TZ: On the ground people are using the parallel market rates and the government is using the official rates. Even some government departments are now starting to use the parallel market rates, which is almost double. So then, if you’re calculating inflation using one currency when the preferred currency is the US dollar the rate at which prices are going up in USD has actually quickened. What is your view on this?
RM: What you are saying is true. To say that prices are still going up, even in USD.
One other observation that we have consistently made is that those same people are receiving foreign currency at the auction rate, which is usually at ZW$85, ZW$86, very low. But, when it comes to the pricing, if you look at most supermarkets, all the products are priced using the black market rate. I don’t even want to call it a parallel rate, it is a black market and it’s blackening our economy and these people are charging as if they were buying forex at the black market. Prices should actually reflect the fact that they are using the auction rate. Their prices need to reflect the auction rate, but they are not reflecting the auction rate, they are reflecting the black market rate.
This is why some government departments – even today somebody was complaining to us to say the government departments are also using the black market. They are now following the prices, you know, that every other person is using the black market rate which is not acceptable. How will we get our country back to be stable? How will we stabilise our prices? How will we stabilise our economy, our currency, if we continue to follow the black market?
Corruption is our biggest threat to this economy. It’s not the currency. It is not even our Zimbabwean dollar. Our money is okay. Even if you look at our exports versus the imports, we are fine, it is just our attitude as Zimbabweans. Our attitude needs to be addressed and we call upon the government to restore consumer confidence in the people.
Consumers need to be confident in the economy so that we stop all this hoarding, we stop speculatory behaviour because people are always speculating saying ‘it means the next step is this, so I have to do this’.
It is always about speculation. We need to restore consumer confidence.
It is all about confidence. It is all about attitude as Zimbabweans. Let’s have a positive attitude, let’s love our own country, let us market our own country. Let us not speak negatively about our country because no one is going to bless our country if we do not do that ourselves.
TZ: Would you say the Consumer Protection Act has been helpful in addressing some of the consumer concerns?
RM: Yes, yes, it is very helpful, the Consumer Protection Act. The legislation that has been put in place to try and protect consumers is starting to work.
If suppliers of goods and services do not respect consumer rights, a consumer has the right to choose, so if consumers are not respected, they are bound to lack confidence in the economy and feel safer buying from elsewhere which is not what we want.
We want to promote our own economy. We want to promote our own local businesses; we want to buy Zimbabwe and want to buy local. But, if we are constantly being faced with unfair practices, where consumers are constantly being trampled upon and their rights are not respected there is no way we can have consumer confidence.
There is no way we can respect even our own currency. Therefore, it is very important for the business sector to take on the issues of consumer protection.
They need to read and understand the Consumer Protection Act, they actually need to be trained.