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Harare Bureau
GOVERNMENT is considering measures to ensure a rational pricing system in the wake of serious concerns over high prices of goods and services, Vice-President Joice Mujuru said yesterday. Speaking at a ZimTrade exporters’ conference in Harare, VP Mujuru said Cabinet was concerned with high the prices and consensus was that the scenario needed urgent attention.
Cabinet’s concern follows realisation that prices in Zimbabwe were higher compared to those obtaining in region, especially South Africa.
A litre of milk in South Africa costs R10 which is equivalent to $1 while in Zimbabwe it costs $1,55.
A kilogramme of potatoes costs R11 which is equivalent to $1,10 while locally it goes for $1,75.
A loaf of bread in Zimbabwe sells for $1 while in South Africa it costs R8 which is equivalent to 80 cents.
A 2kg pack of rice costs R11,50 in South Africa which is almost $1.50 while locally it sells for $2,20.
“Our pricing system in this country is something that needs to be urgently looked into and we have since discussed this in Cabinet and resolved that we need to definitely work on the pricing structure in this country,” said VP Mujuru.
She said businesses were operating as though there were still in the Zimbabwean dollar era where people used to ‘burn’ the Zimbabwean dollar to get US dollars.
“That mentality must just because we are now dealing with hard currency,” said VP Mujuru.
Zimbabweans are enduring punitive prices despite the fact that South African Rand has been falling, a development that ordinarily should make importing from South Africa cheaper.
The country imports about 60 percent of the goods it consumes from South Africa due to either industry’s incapacity to meet demand or complete unavailability of the products locally.
Considering Zimbabwe uses a basket of currencies dominated by the green back, imports from South Africa should be cheaper as the rand has depreciated against the dollar.
It means one requires less of the green back to import goods priced in the rand.
Retailers have generally been quoting prices on the extreme since dollarisation, reflecting unbridled profiteering similar to what transpired in the hyper inflationary era.
While prices of most goods and services reflect the high cost component arising from the cost of importing or manufacturing, some retailers have seized the opportunity to fleece overburdened consumers surviving on low disposable incomes.
VP Mujuru said companies needed to invest in relevant technologies to improve productivity and quality of goods and services while taking full advantage of export opportunities both in the region and beyond.
She called for urgent interventions aimed at addressing the negative trade balance between Zimbabwe and its trading partners and to improve activity of manufacturers.
VP Mujuru said Government would also intensify efforts to build export capacity while improving the terms of trade.
“The persistent trade deficit calls for urgent action to improve the trade balance through robust export performance and this can only be achieved through competitive exports,” said VP Mujuru.
“The only sustainable source of export earnings is through the export of our value added, competitive goods and services to the rest of the world.”
Most locally produced goods tend to be generally expensive due to the high cost of manufacturing, resulting from a number of factors ranging from high cost of labour, utilities, expensive funding, tight liquidity, shortage of raw materials.
The same factors also mean that after taking into account the cost of transport and import duties, the price of goods and services sold on the local market remain on the higher end.
As a result of the high cost of production, exacerbated by old and inefficient equipment, locally produced products and services cannot compete.
Online Reporter