26 September 2017

Zimbabwe: Industry Allays Fears of Shortages

ZIMBABWE's biggest business representative bodies and captains of industry have dismissed social media reports suggesting that the country will soon face basic commodities' price increases and shortages, urging the public to desist from panic buying.

In separate interviews yesterday, business and industry executives condemned the false reports, which dominated the weekend, and accused perpetrators of inciting public panic and destroying business confidence.

Confederation of Zimbabwe Industries (CZI) president, Mr Sifelani Jabangwe, said such reports were tantamount to sabotaging the country. However, a snap survey by The Herald showed that prices were normal in major formal retailers such as OK and Pick 'n Pay.

"The situation that we are in at the moment is not anything close to the past (2008) because companies are producing although there are challenges.

"The problem that happened last week because of (unfounded) social media reports that there is going to food shortages and price increases, sent the public into a panic mode and with panic buying people buy more than they normally do for daily consumption," he said.

"This means, because of panic buying, people were buying goods that were supposed to be bought by others," the CZI president noted, adding manufacturers were producing enough to meet demand.

"But if everyone starts buying in bulk, more than they normally do, it creates artificial shortages, so it will take a week or two for supplies to be delivered and make-up for the supply gaps," said Mr Jabangwe.

Another business lobby group, the Confederation of Zimbabwe Retailers said the social media reports had malicious intent and "should be discarded with the contempt they deserve".

In an interview CZR president Mr Denford Mutashu said the claims of impending shortages were a hoax and Government should also deal with the parallel market for cash, blamed for some price hikes.

"There is no impending shortage of basic commodities in Zimbabwe. Retailers and wholesalers are working closely with the manufacturers, suppliers and distributors to maintain consistent and sufficient availability of affordable basic goods and services at all times.

"The public is advised not to panic buy and hoard goods like sugar and cooking oil as they are available and not running out," Mr Mutashu said.

"It is high time the Government deals with the parallel market for cash as seen from traders milling across cities and borders of the country who are working to sabotage the country by mopping cash from formal circulation and diverting it out of the financial services sector.

"That is exacerbating the liquidity situation in the country and forcing some manufacturers and retailers to approach the middlemen to access the foreign currency they need to import raw materials and goods that are not readily available in the country," he said.

According to the CZR president, the sudden upward increases in the prices of selected products in recent weeks was a result of two things, first, the panic buying that raised demand on those selected products while the second reason for the nominal rises over the past three months, Mr Mutashu said, was the acute foreign currency shortage.

But the CZR also contends that the retailers also added that some of the recent price hikes in a few shops were a result of market indiscipline.

"However there is a lot of market indiscipline being fueled by greedy and speculative behaviour. The price of cooking oil and most basic goods should be maintained at the levels before the panic buying. Retailers/wholesalers both formal and unregistered should exercise restraint and desist from speculative pricing," Mr Mutashu said.

He also urged the public to make use of plastic and mobile money to pay as they remain viable alternative methods of payment across the country.

"The Governor (Dr Mangudya) has kept his word and cleared the first batch of applications for outstanding foreign currency requirements that CZR submitted last week," the CRZ president added.

Economist, Ms Wendy Mpofu said although the economy was experiencing challenges, indicators did not point to a situation where Zimbabwe was relapsing to basic commodity shortages and price hikes.

Zimbabwe National Chamber of Commerce chief executive officer, Mr Christopher Mugaga, said the prevailing speculation would not last.

"It is unfortunate speculators who have hit the forex market moving over to the goods market, but this was not a new phenomenon in Zimbabwe, as this is also very pronounced in countries like Senegal and Nigeria."

Mr Mugaga said authorities should not introduce any measures into the system to control the artificial shortages or price increases saying doing so would worsen the situation and trigger unjustified price hikes.

"We don't expect authorities to put any control measures because at the moment the market is moving alone and the moment you put control, it worsens the situation. Government at the moment does not have a role in threatening the unjustified price increases and once it moves to control prices, the mischief will become worse," he added.

Zimbabwe has recently experienced sporadic shortages of fuel, a situation that has puzzled many considering that the Reserve Bank recently said it has been allocating foreign currency for fuel consistently. The National Oil Company of Zimbabwe said there was enough stock.

"There has not been any change, deliveries are coming through. But as NOIC we only handle the logistics side of things. However, there are enough stocks in the country, released upon payment for the fuel. Fuel is released as per the allocated amount from the Reserve Bank."

The Oil Expressers Association of Zimbabwe said despite constrained availability of foreign currency to import essential raw materials, there was no notable or impending shortage for normal consumption.

"The public is therefore advised not to engage in panic buying, hoarding and speculative purchases, which create the impression of acute shortages and the risk of holding a perishable commodity such as edible oil as a store of value," said OEAZ in a statement yesterday.

It said potential shortages in selected outlets in urban centres could be averted by immediately increasing the amount of foreign currency allocated to producers, or the extending of RBZ supported Letters of Credit to OEAZ members to allow for the importation of raw materials.

The OEAZ said its members require at least $5 million per week to import soya beans, crude edible oils and other raw materials to satisfy their requirement to meet national demand for oil and related products adequately. However, foreign currency have been constrained to less than $1,5 million per week or 30 percent of their needs.

The OEAZ however said the input and raw material costs have escalated dramatically in the last few months leading to price changes as local suppliers and service providers in particular have adjusted their costs upwards in light of the prevailing economic environment.

It also said the poor liquidity and scarcity of foreign currency have resulted in fast-moving consumer goods such as edible oils becoming a substitute for cash as a store of value, fuelling demand and price inflation.

Surface Investment chief executive Mr Sylvester Mangani expressed concern over the increase in cooking oil prices, saying it was unjustifiable since the retailers were paying for their orders using RTGS.

"Therefore it is worrying that some retailers are now profiteering from the current situation and we are not happy about that because the same retailers are paying us with RTGS for the stock. So they don't have justification to increase prices," Mr Mangani said yesterday.

Formal retailers like Pick n Pay and OK there did not change prices of basic commodities including washing powder, rice, and sugar and cooking oil.

Sugar remained the same as last week at between $1,75 and $1,90, cooking oil was selling from $1,65 to $1,75 for a 750ml bottle while there was a slight surge in price of 2kg of rice, at between $2,40 and $2,59

However, wholesalers have moved away from their traditional low prices with some commodities now selling for prices higher than in retail shops.

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