INDUSTRY and Commerce minister Sekai Nzenza has urged businesses to practice good ethics in their trade, saying indiscipline would force the government to come up with unfavourable counter measures.
Her remarks come at a time when the government is under fire from the consumers over the skyrocketing prices of basic commodities which has worsened the plight of the already cash strapped citizens.
Industrialists and businesses have been at loggerheads with the government over Zimdollar prices, indicating that they were now failing to acquire basic commodities from suppliers who were refusing the local currency payments.
“Government, under the National Development Strategy 1 (NDS1) has placed the private sector as the engine for accelerated and sustainable growth and development, hence, we continue to invite the private sector to take lead in policy reforms and supporting government’s programmes to develop the motherland and address the perennial challenges affecting our country,” Nzenza told delegates at the Zimbabwe National Chamber of Commerce annual congress in Victoria Falls on Tuesday.
“Let’s continue to strengthen the public-private relations and shun those that try to derail progress. We can only achieve our national goals if we remain united. We are the creators of our own destiny and by working together; we can reach greater heights.
“As government we continue to urge businesses to practice good ethics in their trade as indiscipline calls for counter measures which in some cases, may be unfavourable for business.”
For instance, in June 2020 the government issued a directive suspending all monetary transactions on mobile-phone platforms and halted trade on the Zimbabwe Stock Exchange (ZSE). The government accused mobile money platforms and the ZSE of a conspiracy to sabotage the Zimbabwe dollar.
Critics say the government is deflecting blame for Zimbabwe's ongoing economic crisis by accusing the private sector of deploying exorbitant pricing models, rather than meaningfully attempting to undertake political and economic reforms.
- In-depth Interview: 'Local tourism on great rebound'
- Financial inclusion critical for African agriculture success
- Govt challenges youths to participate in tourism
- New perspectives: Moderating parallel market exchange rates
However, the government has of late been called on to liberalise the exchange rate and allow market forces to determine prices.
The recommendations are part of a report from a study by various government agencies including the Competition and Tariff Commission, National Competitiveness Commission and Consumer Protection Commission.
The study’s objectives included assessing pricing disparities of basic commodities, investigating cost drivers to the recent price hikes, monitoring the movement of basic commodities while tracking the impact of the recent removal of import licences and duties on basic commodities.
According to the report, liberalising the exchange rate was unlikely to lead to increases in prices as manufacturers' prices were pegged in US dollars and indexed to the parallel market.
In its findings, the study noted that price increases have been witnessed in local currency terms while they have remained fairly stable in US dollars.
“The price increase was huge in May when the local currency depreciated by 34%, indicating that the price increase was exchange rate induced,” the report states.
“The blended inflation index does not give an accurate position on inflation since the formal sector uses local currency to price products.”
In its assessment of the impact of cost drivers to the recent price hikes, the study indicated that US dollar denominated cost drivers were relatively stable compared to those charged in the local currency.
It said this indicated a positive relationship between the depreciating exchange rate and increases in local currency denominated cost drivers.
On the movement of basic commodities into the informal sector, the agencies indicated that lower prices in the informal market were a result of local manufacturing giving discounts for US dollars and attractive trading terms in cash purchases over local currency purchases.