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Zimbabwe: Shortage of Goods Persists
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Financial Gazette (Harare)
8 May 2008
Posted to the web 9 May 2008
Harare
ZIMBABWE'S retail outlets continue to grapple with shortages as the economy remains on a recession path, with the manufacturing sector still battling against power outages and foreign currency shortages.
There was little sign of an immediate relief to the manufacturing sector as a result of a monetary policy statement by Reserve Bank of Zimbabwe governor Gideon Gono last week, although commentators said measures to do with the liberalisation of the exchange rate could bring industrial operations, particularly exporters, back to life.
The Zimbabwe dollar, which had been fixed at $30 000 to the greenback, slumped to a historic low against the US dollar, trading at $160 million to the greenback after new measures became effective on Friday last week.
The movement in the exchange rate was expected to improve the Zimbabwe dollar cash flow position for most exporting companies, which had previously incurred loses due to the fixed exchange rate.
It was also expected to give a new lease of life to other companies battling to survive due to lack of foreign currency to import critical inputs and machinery parts. Under the new exchange rate policy, exporters and importers can now freely trade foreign exchange in the de-controlled inter-bank foreign exchange market, but they will use a pre-determined list of key sectors for disposal of the foreign cash. Shelves in most major outlets remained empty, with stock levels depressed.
Gono said last week that he expected the situation to improve as a result of the new foreign currency policy, as well as other measures meant to resuscitate the ailing economy.
He encouraged government to move away from a rigid price control regime to allow for economic turnaround.
Zimbabwe's Attorney General over a month ago revealed plans to tighten the country's law to control escalating prices of basic goods and essential services, including a jail term for retailers or manufacturers charging prices above those stipulated by government.
Current market-wide shortages have created an environment of fear in the country, with the arrest of business executives for violation of price controls having added to increasing shortages as a result of a slow-down in production.
Highlighting such fear was a recent spate of advertisements by key producers of basic commodities disowning the trading of their foodstuffs on the black market.
Unilever Zimbabwe, a subsidiary of Unilever South East Africa, recently issued a public notice saying it was sticking to controlled prices for its products, warning retailers and the public "against charging more than the stipulated prices".
"We urge anyone who is overcharged for our products to report to the police immediately," Unilever said in a notice which had a schedule of prices approved by the National Incomes and Pricing Commission.
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Dairibord Zimbabwe, a subsidiary of the Zimbabwe Stock Exchange listed Dairibord Holdings, also issued a notice saying, due to "the hyperinflationary environment and supply challenges, it has come to the company's attention that milk and milk products are being sold at prices way above the official approved levels".
Bread maker, Lobels Bakery, whose executives have been arrested several times for overcharging, also came out with a plea to direct the police to retailers violating price controls on its products, saying it was complying with the law.
Surprisingly, most key products by these companies are scarcely available on the official market.
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