The Herald (Harare)

13 July 2007

Zimbabwe: Time Ripe for New Social Contract

editorial

Harare — NO ONE can honestly deny that Zimbabwe is experiencing a potpourri of unusual economic problems compounded by political forces at home and abroad that seem to have ganged up against the Government and the people who vote it into power.

Which is why the problems can't be attributed to economic fundamentals or the lack thereof per se, but to sleight of subversive political hand as well.

As such, their resolution cannot be left to textbook economics but proactive and innovative thinking outside of the box.

This is why the Government clampdown on profiteering businesses bent on fattening themselves at the expense of hapless consumers has to be commended.

Particularly when the line between business and politics appears to have been blurred by the cosy relationship between the MDC and some employers with whom the opposition corroborated during its numerous abortive stayaways and mass actions.

Not surprisingly, Morgan Tsvangirai, the leader of a combative faction of the MDC, has already sided with profiteering businesses.

In condemning the Government for striving to restore normalcy, Tsvangirai unequivocally urged businesses to defy the directive to reduce prices to pre-June 18 levels while working on identifiable pricing formulae or models.

It should be stressed from the outset that the Government has not said businesses should operate at a loss. Far from it.

It is simply demanding ethical and humane practice.

Ethical practice would create a win-win situation for all social partners, more so for the consumer who had become the proverbial grass that bears the brunt of a jumbo fight.

No sane person would argue against such a rational call, which was, in fact, the spirit behind the historic signing of the social contract that came into force on June 1, but which some partners, particularly business, appear to believe existed on paper only.

The objective of that long-drawn social contract was to expedite economic turnaround by taming runaway inflation, but what obtained in the wake of the agreement was unforgivable as prices began going up like a plague.

The situation was not helped by outgoing US ambassador Christopher Dell's wild predictions that the Government would fall within six months by which time, he said, inflation would have hit the 1,5 million percent mark.

Dell's wild predictions and the speed with which shop assistants were changing prices on the shelves raised a lot of suspicion, and no sane government would have remained indifferent to such provocation.

That the profits that were being recorded by business were astronomical was beyond question as indeed the partners of one of the largest supermarket chains here, Pick n' Pay of South Africa, reportedly conceded when they were quoted as saying the profits they were accruing in Zimbabwe were unbelievable.

We commend the Confederation of Zimbabwe Industries for being rational by urging all manufacturers to heed the Government directive.

We also salute all businesses that heeded the call and urge the recalcitrant ones to do the same.

There is no doubt that the prevailing cloud of suspicion, policing and hunting each other down is not sustainable, which is why there is greater need for all concerned to come to the table and set parameters on ethical and legal pricing.

The CZI must engage the Ministerial Taskforce and the National Incomes and Pricing Commission under a new social contract aimed at fostering ethical pricing.

Henceforth, there is no room for the old, illegal, extortionate pricing that saw business indexing commodities to the parallel market exchange rate for the US dollar.

All prices must be based on actual production and distribution costs in Zimbabwe dollar terms.

Everyone wants to see our economy take its rightful place in the region, and that can only be done through good corporate governance.

Again there is nothing to delay a negotiated solution for the future as the majority of businesses have complied with the directive. Inflation, our number one enemy, has got to come down and the starting point is for industry to live up to the social contract.

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