Online Reporter
ZIMBABWE is a small country, with a population of just over 17 million, and so the dangers of monopolies and cartels providing goods and services is high.
By avoiding competition, such cartels of a handful of service providers, or near or de-facto monopolies, can both hide their own inefficiencies or actively set prices at higher levels than an open market would probably do.
There are limits when it comes to non-perishable goods and even food and other products for human consumption that have a long shelf life and do not require strong licensing regimes.
Imports provide the necessary competition and the landed cost of imports sets a limit on price and forces Zimbabwean manufacturers to compete on price and quality, so we all still win.
The rise of common markets is making this even a more obvious route, with the accompanying commitment to reduce tariffs and non-tariff barriers such as import and export licences.
So there is a growing range of Zimbabwean manufacturing industries where there might only be one or two industrialists making a product, but who cannot use monopolist or cartel pricing to make excess profit or hide their own internal inefficiencies and lack of cost control.
But as soon as we move into perishable foods with shorter shelf lives, the products that require strict licensing or many services, then foreign competition is largely negligible for all practical purposes, at least for ordinary people who cannot afford to fly out to countries with cheaper goods and services.
President Mnangagwa, when commissioning the University of Zimbabwe’s Specialists Medical Centre in Harare this week, brought up the health sector where there are a number of hidden cartels operating.
Healthcare obviously demands a fairly strict licensing regime to prevent sub-standard medicines and dubious services being offered, and we cannot complain that there have to be good rules properly enforced.
But the unintended barriers that can arise for new entrants and the previous severe scarcity of some services did allow discreet price-fixing at unjustifiable high levels.
The President was not suggesting in his remarks to sending in the trust-busters; rather he wanted the Ministry of Health and Child Care to make it easier for new entrants outside the cartels to enter the sector.
His own continual pressure for practical upgrades in the public health sector is nibbling away at the other end, by offering alternatives at far lower costs, and the UZ specialist centre he commissioned, in the suburb where so many private providers congregate, can be thought as part of this effort.
While there are some appallingly priced services, changes because of more newcomers are starting to take effect, as anyone for example, who needs laboratory tests might well have discovered if they insist on being allowed to look around instead of just taking a form handed out by some doctors to a specified laboratory.
Cartels are not just providers but often create the market links to make sure they dominate a market.
So the President is pushing open the right doors. The growing number of future health practitioners now at university and who will shortly be boosting the profession is another good sign.
Again the Government policy of encouraging a lot more local manufacture of pharmaceuticals and medical consumables and equipment should also ease the access of new entrants and create some much needed internal competition that this sector so desperately needs.
Medical services are not the only area where informal cartels form. In too many areas even when there is competition on the surface, discreet understandings can be made.
Bread prices, over the years, have been extensively commented on, where identical prices, at least by the major bakers, would seem impossible considering the different costing, especially transport costs.
While the retail end has higher levels of competition, the production end of so many industries is often dominated by a single company or just a handful of concerns, and while there is never anything in writing and zero proof available, it would not be hard for a few industrialists to meet over a cup of coffee, or even play a round of golf together without witnesses.
The Zimbabwe Competition and Tariff Commission does exist, and does act when certain producers or service providers want to merge or buy each other out.
But it has not been overactive in investigating informal cartels and similar arrangements. Yet every modern economy needs such a body to be active and be able to dig a lot more deeply than what happens at present.
We feel there could be some very interesting results, even if proof for criminal cases might be hard to find, once lists of suspicious tendencies were available.
Such investigations might well uncover more formal arrangements, but even the more common informal understandings could be considered imprudent if there were more active investigations.
