Zimbabwe is among the most expensive countries in Africa. While wages and salaries lag behind most in southern Africa, , prices of such commodities and services as fuel, transportation, food and health are among the highest in the region.
John Mangudya, the Reserve Bank of Zimbabwe (RBZ) governor, last week told labour unions that instead of hiking salaries, there was need to bring prices of goods and services down.
Respected economist Vince Musewe regretted that the RBZ boss was short on solutions. “Mangudya is right that prices are distorting things and negatively affecting the economy, but he does not give us concrete solutions nor a comprehensive analysis of the root cause of overpricing. Government must start with a proper diagnosis before offering solutions,” he said, adding that overpricing was due to psychological and structural factors.
“At the psychological level, there is a money anxiety syndrome that was produced by the hyperinflationary period we went through. There is a ‘get money quick’ tendency among Zimbabweans that results in profiteering,” he said.
“Because of the hyperinflation, people are now used to big figures. This is seen through ridiculous price mark-ups even on the informal market. That mind-set must be changed and government ought to instil a proper attitude in retailers, wholesalers and manufacturers alike,” added Musewe.
“At the structural level, you see many cost drivers in goods, power, transport and even duty. What do you expect when the government is charging 80 or even 100 percent as import duty? Those that import will meet other costs in transportation and placing their goods on the market. They will do big markups to offset the costs and make a profit,” said the economist.
Workers in both the private and public sectors have perennially complained that their salaries are too low to match the consumer price index, which measures the minimum amount of money required to sustain an average family.
Economist John Robertson warned government against adopting pricing control measures, saying they tended to create artificial shortages and push commodity prices up.
Post published in: Business